Safaricom rings up Sh24b in six months as data use rise

CEO Safaricom Bob Collymore (centre) is accompanied by Sateesh Kamath Chief Financial officer at Safaricom and Nicholas Ng'anga'. Safaricom mobile phone subscribers earned the company half a billion shillings every day during the six months period to September 30. (PHOTO: COURTESY)

Safaricom earned half a billion shillings everyday from mobile phone subscribers during the six-month period running up to September 30. The telecommunications firm made a net profit of Sh23.9 billion, retaining the top spot as the most profitable company in the region.Safaricom mobile phone subscribers earned the company half a billion hillings every day during the six months period to September 30. This earned the telecommunications firm a massive Sh102 billion in total revenue for the half year compared to Sh97.2 billion over the same period last year.

It further made a net profit of Sh23.9 billion, retaining the top spot as the most profitable company in the region. This means the firm was making on average a daily profit of Sh132 million.

The profitability grew by 32 per cent from Sh18 billion reported the same period last year.

Safaricom’s growth in profits was on the back of increased usage of non-voice products such as M-Pesa and mobile data by its customers. Revenues from non-voice category notably grew to surpass revenues from the traditional mainstay of voice services, and are now fast becoming the firm’s “bread and butter”.

The firm earned Sh52 billion from the non-voice revenue stream under which mobile money and data registered the fastest growth. Revenues from voice service stood at Sh45.7 billion and a further Sh4 billion from the sale of handsets at its retail outlets.

Mobile data revenues grew 46 per cent to Sh13 billion while M-Pesa revenues went up 33 per cent to Sh25 billion.

Growing appetite

“A majority of our revenue, for the first time, is represented by our non-voice revenues. We attribute this to a growing appetite for data,” said Bob Collymore, Safaricom's Chief Executive Officer. “Voice continues to show resilient growth. It is not a dead area yet. We see a population growth of a million people every year and for us this is an opportunity to grow both voice and non-voice revenues,” he added.

The figures were also boosted by a one-off provision write back of Sh3.35 billion from a dispute settled in favour of the company.

And in a bid to further increase the non-voice revenue, it announced that it would scrap M-Pesa charges for sending and Lipa Na M-Pesa transactions for amounts below Sh100.

“We have reviewed charges for person-to-person and Lipa Na Mpesa transactions under Sh100. Under the ‘M-Pesa Kadogo’ it will be free to send value of Sh100 and below,” said Collymore.

“To guard against abuse, we will limit the number of transactions between two specific numbers over a period of time.”

This is expected to increase the number of people active on the mobile money ecosystem and the number of transactions the system handles. This is at a time when the firm has to ward off competition, with increased activity in the mobile money front.

The firm said in the six months, free cash flow more than doubled to Sh20.1 billion in improved trading results and completion of the National Police Security (NPS) Network Project. The telco spent Sh8.44 billion on the project by September 2015.

Going forward, Collymore said Safaricom would continue its push to have more of its customers using mobile data services. The firm will increase its 4G base stations to 1,000 by end of this year as well as partner with handset makers to avail cheaper smartphones in the market.

“Mobile data is our fastest growing revenue stream and we will focus on increasing the number of 3G and 4G smartphones on our network through launching more 4G sites and offering affordable smart devices. We will continue with our fibre rollout to homes that will enable us to offer high speed Internet,” he said.

The firm is bullish about the rest of the year and expects to maintain the growth momentum over the remaining six months of its financial year and projects that its revenues and profitability will double.

It expects its operating profits to hit Sh97 billion for the full year to March 2017.

Yesterday at the Nairobi Securities Exchange (NSE), Safaricom dominated activity and accounted for 67.3 per cent of turnover. The telco touched a high of Sh21.75, closing unchanged at Sh21.25.

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