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Safaricom’s half-year profits tipped to swell by 11pc

By Wainaina Wambu | October 14th 2020 at 00:00:00 GMT +0300

Safaricom Chief Financial Officer Sateesh Kamath (left) hands over a dummy key of the 3 bedroom apartment to Salma Salim Mohamed, the 4th winner of Lipa Na M-Pesa promotion. [File, Standard]

Analysts have projected a 10.9 per cent jump in Safaricom’s 2021 half-year profits chiefly driven by fixed service and mobile data revenues.

This is despite a 4.3 per cent projected drop in M-Pesa revenues for the first half of the telco’s financial year that ends in March 2021, although they are expected to rebound in the second half after the end of as zero-rated transactions, according to a report by KCB Capital.

“We expect that M-Pesa revenue will be subdued, down 4.3 per cent year on year in half-year 1, 2021 on the back of the zero-rated transaction fees,” said the KCB analysis.

“However, we anticipate a rebound in the last quarter of the financial year (which coincides with the culmination of the directive on zero-rated transactions), with M-Pesa revenue growing 4.5 per cent in financial year 2021, on the back of increased usage, following the Covid-19 pandemic.”

Safaricom is expected to release its 2021 half-year results soon. The analysts expect SMS revenue to perform “marginally well.” This coincides with the recently released Communications Authority statistics that showed a 19.5 per cent rise in messages for the firm in the quarter leading to June 2020.

The analysts said year on year revenues in the first half of 2021 would be flat.

“While the impact of the pandemic will adversely impact the firm in the short-term, we remain optimistic in the long-term outlook, given digital platforms are expected to become increasingly essential, even as the effects of the healthcare crisis water down,” said the CBK analysis.

The analysts anticipated that the zero-rating of person-to-person transactions below Sh1000 – in effect up to the end of this year – will see M-Pesa revenue decline 4.3 per cent year-on-year.


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