Safaricom net profit drops to Sh67.49 billion
A customer withdraws money from an M-Pesa shop.
Safaricom has posted a 1.7 per cent profit drop for the financial year ended March of Sh67.49 billion attributed to costs relating to the ongoing establishment of its Ethiopia unit that is in its first year of operation.
The loss is Safaricom's second in a row after its net profit for the financial year ended March 2021 dropped by 6.8 per cent to Sh68.67 billion from Sh73.65 billion the previous year that was driven by a sharp fall in M-Pesa revenues following a slash in mobile money transfer charges.
Safaricom Ethiopia recorded a loss after tax of Sh4.85 billion driven by staff and marketing costs of the subsidiary that the telco said it expects to break even in its fourth year.
However, Safaricom Kenya posted a 5.4 per cent net profit growth during the year to Sh72.4 billion up from Sh68.7 billion last year driven by a rebound in M-Pesa revenue following the reinstatement of mobile money transfer charges in January last year.
The company's service revenue grew 12.3 per cent year on year to Sh281.1 billion supported by sharp growth in M-Pesa, mobile data recovery and fixed data growth.
M-Pesa revenue grew strongly by 30.3 per cent to Sh107.69 billion during the year even as the average monthly revenue generated by each user of the service grew 18.9 per cent underlining the increasing reliance on M-Pesa for money transfer and business payments.
Safaricom also recorded an 8.1 per cent growth in mobile data revenue to Sh48.44 billion attributed to tailoring of data offers to each customer and a drop in data charges with the average rate per megabyte dropping 31.2 per cent to 8.88 cents during the year.
The telco's voice revenue grew marginally by 0.8 per cent to Sh83.21 billion while messaging revenue dropped 20 per cent to Sh10.87 billion due to stiff competition from the continued growing use of internet-based messaging apps such as WhatsApp.
Safaricom board has recommended a final dividend of Sh0.75 per share amounting to Sh30.04 billion, bringing the total payout for the year to Sh56 billion.
The telco had paid an interim dividend of Sh0.64 per ordinary share amounting to Sh25.64 billion.
Safaricom Chief Executive Peter Ndegwa confirmed that the company is in talks with the Communications Authority of Kenya (CA) for a license for rollout of its fifth generation (5G) network which the telco aims to use to tap into the growing demand for super fast internet.
Nation exclusively reported this week that the company has been allocated a prime internet spectrum for the 5G mobile technology network, pushing it closer to rolling out commercial superfast internet.
Insiders told the Nation that the telco got a 60 megahertz (MHz) spectrum in the 2600MHz band from the CA even as Mr Ndegwa remained tight-lipped on the amount of money the company has paid for the license.
"We have already done trials for the 5G network across the country last year. We are in discussions with the CA for a bandwidth," Mr Ndegwa said.
