Safaricom is Kenya’s largest mobile network provider whose operations are split into four main revenue streams: mobile money, voice service, data services and enterprise solutions.
M-Pesa is Safaricom’s most successful service and has been growing rapidly since it launched in 2007. As of the H-1 2022 alone, there were 41.92 million registered users on this platform who transacted approximately $451.42 billion. This represents an increase from 38.14 million users transacting $309.6 million during the same period last year.
Data services also increased by 6.3 per cent to $451.42 million to $191.76 million based on an increasing customer base. One month active mobile data customers grew to 24.05 million, a 5.0 per cent YoY growth from 22.91 million while distinct bundle users performance rose by 8.1 per cent to 16.95 million from 15.68 million.
Service revenues increased by 16.9 per cent YoY to $1.19 billion compared to $1.02 billion in H-1 2021. The recovery is tied to growth in M-Pesa revenues which contributed to 37.8 per cent to total revenues compared to a contribution of 30.3% similar period last year.
Mobile subscribers grew to 41.92 million, a 10 per cent jump from 38.14 million indicating that Safaricom can retain its existing customer base despite increased competition from other competitors.
Safaricom’s service revenue is made up of mobile money, voice and data, value-added services and other sources. While the firm has seen strong growth in all three categories over the last quarter, its value-added service revenue has been growing at a faster pace than its voice and data streams.
M-Pesa transaction value grows by 27.3 Per cent YoY
The number of transactions on M-Pesa grew by 51.5 per cent in H-1 2022 to $118.18 million compared to a similar period last year.
The transaction volume of M-Pesa increased by 42.0 per cent YoY to $62.62 million in Q-Q1 2022. The increase is attributed to the return on fees on P2P transactions below $10. Transfers between M-PESA wallet – Bank and Bank – MPESA wallet remain zero-rated and makes up 18.1 per cent of the total transaction. The return on the charges is set to boost revenue line performance.
Another reason for the increase in Safaricom service revenue is mobile money loans. Disbursement on Fuliza grew by 62.4 per cent to $2.10 billion from $1.29 billion. Revenues increased by 32.2 per cent to 24.15 million from $18.12. Daily active Fuliza customers grew by 63.8 per cent to 1.7 million from 1.0 million seen in H1-21.
When a customer borrows from Fuliza, it’s not considered as a sale of goods or services; instead, it’s considered as an interest-bearing deposit with Safaricom so there is no direct revenue recorded on the balance sheet but only expenses that relate to disbursement of these loans such as acquisition cost, distribution costs etc., which are accounted for under other operating costs in profit and loss statement; this means that it does not form part of service revenue since they do not contribute directly towards providing service(s) (Tearney et al., 2013).
Although Safaricom’s service revenue has grown every year, the company continues to enjoy impressive growth in most of its product lines.