Ethiopian Investment Dents Safaricom’s Profit

Kenya’s telco Safaricom has recorded a 1.7 per cent drop in net profit to $581 million in the first financial results that account for its Ethiopian operations. The drop is attributed to the impact of Safaricom’s $40.12 million financing costs for its investment in Ethiopia.

Last year, Safaricom led consortium acquired a telecommunications license last year to operate in Ethiopia and is set to commercially launch its services in the country this year.

During the 2021-2022 financial period, Safaricom’s M-PESA revenue increased by 30.3 per cent to $927.16 million attributed to the return on fees on P2P transactions below $10 and an increase in Mpesa merchants by 63.4 per cent to just below 500,000. M-PESA now has over 3.2 million businesses accepting payments under its portfolio, while the M-PESA business app has about 100,000 active businesses.

Mpesa revenue is set to further improve in future since Safaricom plans to roll out mobile financial services to the country’s 110 million people subject to the licensing and regulatory process by the Government of Ethiopia.

Safaricom’s Service Revenue increased by 12.3 per cent to $2.4 billion. Voice service revenue grew by 0.8 per cent to $716. 40 million and mobile data revenue grew by 8.1 per cent to $417.05 million. The growth in the mobile data revenue is attributed to an increase in one-month active mobile data customers which rose by 6.1 per cent to 25.22 million.

During the period under review, Safaricom’s overall customer base rose by 6.4 per cent to 42.44 million. The company has invested over $338.69 million in Capital Expenditure (CAPEX) in Kenya to maintain and expand the network and ensure they enjoy reliable network coverage and uninterrupted data services. It is currently piloting 5G network and is targeting to launch 150 sites during the next financial year. On the other hand, it has invested $89.88 million in Ethiopia as it fast tracks its network rollout plans.

Safaricom board has recommended a final dividend of $0.0065 per share amounting to $258.63 million, bringing the total payout for the year to $482.13 million. The telco had paid an interim dividend of $0.0065 per ordinary share amounting to $220.75 million.