Safaricom net income down to Kshs. 68B as covid bites M-pesa revenue

Safaricom CEO Peter Ndegwa. PHOTO | Courtesy

Safaricom Plc has recorded a decline in full year earnings as net income dropped 6.8% to Kshs. 68.68 billion in a period major revenue streams were hurt by COVID-19.

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During the period ending 31st March 2021, the giant telco saw revenue from M-pesa reduce 2.1% to Kshs. 82.64 billion while voice revenue also tumbled to Kshs. 82.55 billion, a 4.6% drop.

Messaging revenue also took a 11.7% year-on-year dip to Kshs. 13.60 billion.

Nonetheless, the movement restrictions due to COVID-19 that resulted to customers turning to online platforms to interact saw mobile data revenue register a double-digit growth of Kshs. 44.79 billion representing a 11.5% growth year-on-year (YoY).

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This sustained service revenue which declined marginally by 0.3% to stand at Kshs. 250.35 billion.

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Safaricom Chief Executive Officer Peter Ndegwa attributes the mobile money revenue drop to fee waiver on transactions below 1000 to mitigate the impact of the health pandemic as free transactions hit Kshs. 4.4 billion.

“We remained resilient in a disruptive year, demonstrating strong operational capacity, diligence and commitment in supporting the country, our customers and shareholders through this uncertain time. Our immediate focus in the year has been to ensure that network capacity, operations and financial services are prioritized to limit disruptions,” said Peter Ndegwa, Safaricom CEO.

Speaking during the financial result announcement on Tuesday, Ndegwa said the share of M-pesa in service revenue declined to 33% from 33.6% last year, impacted by the waiver of the Peer-to-Peer (P2P) transactions fees.

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Earnings before Interest and Tax (EBIT) also declined 5.3% year-on-year to Kshs. 96.16 billion.

“Despite a tough financial year, the company is committed to investing in the business and maintaining a consistent dividend payout ratio in line with our dividend policy. Our guidance for the Financial year 2022 is at the range of Kshs. 105 – 108 billion for Earnings Before Interest and Tax and Capital Expenditure guidance in the range of Kshs. 40-43 billion,” Ndegwa added.

With 39 million subscribers on its network at the end of December 2020, the firm says total one-month active customer base increased by 9.9% to 31.45 million while one month active M-PESA customers increased 13.6% to 28.31 million.

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On the other hand, one month active mobile data customers increased 8.1% to 23.77 million.

The board has recommended a final dividend payout of 92 cents per share amounting to 36.86 billion.

The board had earlier recommended an interim dividend of 0.45 cents per share amounting to Kshs. 18 billion.

Going forward, Chairman Michael Joseph says the telco will continue with its diversification strategy that will drive future growth.

“In the period under review, the board approved a new strategic position that will move Safaricom from a telco business into a purpose-led technology organization. This strategy will see Safaricom focus on new business areas such as agribusiness, education, healthcare, financial services ad support for small businesses including regional expansion,” said Joseph.


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