Driven by Drop in M-Pesa Revenues, Safaricom PLC Profits Decline 6%

Kenya’s biggest telecoms operator, Safaricom, said half-year net profit fell six percent to 33.07 billion shillings (about 303.62 million dollars) with M-Pesa revenue dropping the most on account of free transactions to support customers during Covid-19 period.

The results, covering between April and September also saw voice and messaging revenue dip in the period that coincided with rising Covid-19 infections that forced the state to enforce disruptive measures such as curfew and ban on social gatherings.

CEO Peter Ndegwa on Monday described the performance as “good” given the massive disruption that the infectious virus has had on households and businesses.

“It has been a good half-year and we are seeing improvement in the second half. However, we know Covid-19 disruption is not over given the resurgence in infections,” said Mr Ndegwa.

M-Pesa revenue dropped by 14.5 percent to Sh35.89 billion about (329.516 million dollars) despite the value of transactions rising by 32.9 percent to Sh9.47 trillion (86.946 billion dollars).

The drop was on account of the decision to zero-rate fees on transactions of Sh1,000 and below to reduce cash handling in Covid-19 environment.

“We have seen increased activity in the M-Pesa eco-system as customers take advantage of the free fees on person to person and Lipa na M-Pesa transactions below Sh1,000 and M-Pesa wallet to bank and bank to wallet transfers,” said the telco.

However, the telco benefitted from the increased number of people who were working from home to lower risks of contracting the infectious virus.

Mobile data revenue grew by 14.1 percent while fibre to home revenues rose by 47.2 percent.

Safaricom says that uncertainties still persist for the full year given the recent surge in infections, the continued zero-rating of M-Pesa transactions of Sh1,000 and how customers will react when charges are reinstated.

Business Daily

Follow us on: