Safaricom takes a pandemic hit as profit drops 11.5%

Safaricom takes a pandemic hit as profit drops 11.5%

Listed telco, Safaricom recorded an 11.5 percent drop in its pre-tax profit to Ksh. 93.635 billion during the financial year ended March 31st, 2020.

In its full-year financial results for the period ended March 31, 2021, Safaricom’s profit after tax dropped by 6.8 percent to KSh. 68.676 billion.

The telco giant also reported slight increase of 0.6 percent in total revenue to Ksh. 264 billion from Ksh. 262.5 billion in 2020.

Safaricom’s marginal revenue growth was largely supported by an 11.5 percent growth in revenue from mobile data to Ksh. 44.79 billion. This was achieved against the backdrop of increased use of mobile data as Work-from-Home and virtual meetings took root due to the need for social distancing measures to curb the spread of COVID-19.

Meanwhile, M-PESA revenue dropped by 2.1 percent to Ksh. 82.65 billion. Revenue from voice calls dropped by 4.6 percent to Ksh. 82.5 billion. This was attributed to the waiver of the Peer-to-Peer transactions fees in 2020 as part of measures to promote cashless transactions to curb the spread of COVID-19. Safaricom waived fees for transactions below Ksh. 1,000, which saw free transactions worth Ksh. 4.4 billion processed.

As a result, the total value of M-PESA transactions grew by 58.2 percent Year-on-Year to Ksh. 22.04 trillion while the volume of transactions grew by 29.8 percent Year-on-Year to Ksh. 11.68 billion that year.

During the period under review, M-PESA accounted for 33 percent of Safaricom’s total service revenue down from 33.6 percent last year.

“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.

Safaricom’s Savings and Lending products registered double digit growth with its Fuliza micro lending product outpacing the performance of the KCB M-PESA and M-Shwari products. Fuliza saw a 43.6 percent growth in disbursements to Ksh. 351.2 billion. The telco’s revenue from Fuliza subsequently rose by 61.3 percent to Ksh. 4.5 billion.

The number of daily active Fuliza customers also doubled to 1.4 million.

To support Micro and Small Medium Enterprises (MSMEs), the company introduced the Pochi la Biashara, M-PESA Business App, Bill Manager, Merchant Transacting Till and Self On-Boarding process. Safaricom has also announced that the consumer M-PESA App will be launched in quarter one of the current financial year.

Moving forward, Safaricom CEO has said the telco projects its Earnings Before Interest and Tax (EBIT) to range between KSh. 105 billion and Ksh. 108 billion.

Following the results, Safaricom’s Board of Directors has proposed the payment of a final dividend of 92 cents per ordinary share, which added to the interim dividend of 45 cents per share will translate to a total dividend of Ksh. 1.37 per share. The proposed dividend payout, which will be approved during the company’s Annual General Meeting (AGM) set for July 2021, will be Ksh. 54.89 billion.

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Ken Aseka is a hands-on broadcast journalist with genuine interest, skills and competencies in news sourcing, packaging, and dissemination. As a seasoned journalist, Aseka has previously worked with leading media houses in Kenya as a news editor, writer and reporter. He is currently a news editor at Metropol TV.

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