Arguably one of the top telecommunications companies in Africa, Safaricom’s operations are split into four main revenue streams: mobile money, voice service, data services, and enterprise solutions.
Safaricom have released their half year results and it’s all profits. For a company that initially begun as just a telco, Safaricom currently makes a significant percentage of it’s revenue from technology and innovation endeavours.
The company’s service revenue grew 16.9% YoY to Ksh 138.4 billion (approx. $1.2 billion) from the results recorded in H1 FY21. This has been widely driven by an increase in its M-Pesa revenue recovery after the service had been affected by the government’s directive to scrap transactional fees for money transfers below Ksh. 1000 (Approx. $10).
Tech-driven M-Pesa is Safaricom’s most successful service and has been growing rapidly since it launched in 2007. By 2017, there were 30 million registered users on this platform who transacted KSh 5 billion (approximately $50 million USD). This represents an increase from 15 million users transacting KSh 1 billion ($10 million USD) in 2013.
In this H1 FY22 results, M-Pesa is the biggest revenue earner showing a growth of 45.8% from H1 FY21. The other revenue earners for the firm hardly got to 30% growth YoY from H1 FY21.
Voice revenue is the second highest earner for Safaricom with a 32% YoY to Ksh 41.4 billion (approx. $357.5 million). Messaging revenue saw an 18.3% increase to Ksh 5.8 billion (approx. $50.1 million) while mobile data revenue increased by 6.3% to Ksh 23.6 billion (approx. 203.6 billion).
While the firm has seen strong growth in all its categories of services offered (mobile money, voice service, data services, and enterprise solutions), its value-added service revenue has been growing at a faster pace than its voice and data streams.
It’s value-added data services and mobile money are driven by technology and innovation. This continues to give the telco an edge over its competitors in the market.
M-Pesa transaction value grows by 45.8% YoY
M-Pesa revenue recorded strong performance growing 45.8% YoY in H1 FY22 following the return to charging M-Pesa transactions above Ksh 100 (Approx. $1) at the beginning of January 2021. The Total transaction value grew 51.5% YoY to Ksh 13.7 trillion ($118.4 billion) while volume of transactions grew 42.0% YoY.
M-Pesa wallet to bank and bank to M-Pesa wallet transactions continue to be free and these account for 18.1% of the total value of M-Pesa transactions. Chargeable transactions per one month active customers grew 91.9% YoY to 18.1 transactions. Innovation in digital financial services has been a key growth driver for M-Pesa.
This is also attributed to increased activity in the eco-system with 67% of total registered M-Pesa customers making up the one month active M-Pesa customers. M-Pesa now accounts for 37.8% of service revenue, reflective of the opportunity for digital financial services to consumers and enterprise customers.
The loan services associated with M-Pesa have also played a big part in the big numbers recorded by the mobile-money transfer service offered by Safaricom.
Loan overdraft service, Fuliza has grown in revenue by 32% to Ksh 2.8 billion (approx. $24.2 million). Daily active Fuliza users have grown by 63.8% from 1 million in 2021 to 1.7 million this year (2022).
M-Shwari’s revenue, on the other hand, has grown by 10.4% to Ksh 1 billion (approx. $8.6 million).
Mpesa Global has also been a significant contributor as well ever since its launch in 2019. The global service enables M-Pesa registered customers to send and receive money from countries across the world. M-PESA Global service remittance partnerships include: Western Union, MoneyGram, Ria, WorldRemit, Wave, Remitly among others.
As Safaricom’s service revenue has grown every year, the company continues to enjoy impressive growth across all of its product lines.