Safaricom posts Sh15 billion drop in profit

Safaricom CEO Peter Ndegwa. [Standard, file]

Kenya's leading telecommunications company Safaricom has reported a Sh15 billion drop in its profits for the Financial Year ending March 31, 2023, representing a 22.3 per cent decline.

The company's net profit for the year under review was Sh52.5 billion, down from Sh67.5 billion the previous year, a drop attributed to higher costs associated with the tough business environment and the company's entry into Ethiopia.

Despite the decline in profit, Safaricom's total revenue increased to Sh310.9 billion, a 4.3 per cent growth, that was driven by the growth of M-Pesa revenue, which increased by 8.8 per cent to Sh117.19 billion, and mobile data revenue, which grew by 10.6 per cent to Sh53.6 billion.

The company's fixed service and wholesale transit revenue also increased by 20.1 per cent to Sh13.50 billion, supported by increased usage and connections.

The company's CEO Peter Ndegwa, speaking during the release of the company's financial year results on Thursday, May 11, attributed the slow growth to macroeconomic challenges experienced during the period, as well as the costs incurred by the telco in setting up services in Ethiopia and the August 2022 elections.

"This year, we all experienced tough headwinds, including high inflation, a depreciating shilling, severe drought, and failed rain seasons among others," Ndegwa said.

"Despite the challenges faced earlier in the year, we were able to benefit from a smooth political transition following the general elections. This stability, along with our strong commercial execution, led to improved performance in the second half of the year."

In October last year, Safaricom launched commercial operations for Safaricom Telecommunications Ethiopia PLC (STE) as a subsidiary of Safaricom PLC, with population coverage of 24 per cent and 1,272 sites covering 22 large and medium-sized cities, after the phased city-by-city customer network pilots.

The company has added three million gross ads since the launch, with 2.14 million customers being a three-month active base.

The telco declared an interim dividend of Sh0.58 per ordinary share during the year, with a final dividend of Sh0.62 per ordinary share proposed for approval at the Annual General Meeting (AGM) to be held on July 28, 2023.

This brings the total dividend for the year to Sh48 billion, representing Sh1.20 per share in respect of the year ending March 31, 2023.

Safaricom's total equity and liabilities were Sh509,207.0 for the year ended March 31, 2023, compared to the previous year, where the company recorded 346,798.6 billion, a per cent change of 46.8 per cent.

The company's mobile data revenue growth is attributed to customer value management initiatives, which have continued to unlock latent potential in usage and growth.

Additionally, the company has continued to enhance affordability, resulting in a rise in chargeable data per subscriber by 53.8 per cent to 3.57GB.