Safaricom reported a 52.1 per cent rise in its half-year profit to Sh42.7 billion, helped by a smaller loss in Ethiopia and M-Pesa’s double-digit growth.
Its net profit grew from Sh28.11 billion the previous year, and it expects to declare an interim dividend in February.
The Kenya business continued to be the main profit driver on the back of M-Pesa, the firm’s largest unit and on course to generate half of the telco’s revenues.
Its reported loss in Ethiopia dropped by 59 per cent compared to the first half of the previous financial year, which was heavily impacted by a depreciation of the birr currency.
The loss in Ethiopia that is attributed to Safaricom dropped to Sh15.2 billion from Sh19.4 billion in the same period a year earlier, translating to a gain of Sh4.2 billion.
Safaricom ventured into Ethiopia in 2022 as the Addis government opened up the tightly-controlled economy to foreign competition and is hoping its presence in Africa's second most populous country will power future growth.
Its diversification from the saturated voice and SMS business is paying off, with M-Pesa, mobile data and fixed internet emerging as sales drivers.
Safaricom’s revenue rose to Sh199.9 billion in the six months to September, from Sh179.9 billion in the same period a year earlier, reflecting a 11.1 per cent growth.
Revenue from mobile financial service M-Pesa rose to Sh88.1 billion from Sh77.2 billion previously, reflecting a growth of 14 per cent.
“In Ethiopia, currency reforms are starting to create a more liquid market and losses in our business have reduced by 20 per cent as our business matures, even as current and pricing reform challenges persist,” Safaricom CEO Peter Ndegwa said at a briefing.
“New areas like insurance and investment have allowed us to add more value to the M-Pesa base we have. So, if you have a boda boda rider with a connectivity solution, and then we provide insurance, they will see more value from Safaricom.”
Fastest-growing revenue lines
The firm’s shares at the Nairobi Securities Exchange closed trading at Sh30.30 compared to Wednesday’s closing price of Sh29.90, having gained 77.7 percent since the start of the year.
Safaricom is also ramping up its data business to offset a decline in mobile calls on increased investments in 4G and 5G networks, as voice saw a small revenue fall due to saturation and rivals like WhatsApp.
The voice business recorded a 0.5 percent decline in revenues to Sh41 billion, marking a big shift as mobile data for the first time overtook sales from calls.
The telco has, in the past five years, raced to convert millions of 2G and 3G subscribers to 4G and some to 5G.
This has come through partnerships like the one with Google, where they are offering affordable smartphones, with customers paying as little as Sh20 a day for nine months.
Besides M-Pesa, data is one of Safaricom's fastest-growing revenue lines, and it hopes that increased smartphone usage will boost it further.
Revenue from mobile data, where Safaricom has been aggressively fighting for market share, increased 18.2 per cent to Sh44.4 billion, while fixed internet to homes and offices rose 10 percent to Sh9.1 billion.
“We have seen a shift during the first half, indicating changes in customer preference where we have seen voice and messaging revenues drop, but this has been compensated by the growth in mobile data” said Dilip Pal, Safaricom chief finance officer.
“Mobile data revenue has for the first time surpassed voice revenue and now accounts for 21 percent of total service revenue. The number to look at is 4G devices within our network and from that, the number of customers using more than 1GB (one-gigabyte) of data per month has increased.”
Revenues from SMS dropped 10.9 percent to Sh5.5 billion as messaging apps like WhatsApp continue to munch its market share.
The shifts in earnings reflect Safaricom’s alteration from a telecom firm to a technology and financial services company offering loans to insurance and unit trusts.
