Safaricom’s Lipa Na M-PESA Revenues up 50 Percent as Telco Reports 31.5 Billion Half Year Net Profit

Safaricom has just concluded the announcement of its Half Year Financial Results for 2018. The details of the telco’s financials were made official at the telco’s Head Office, and in attendance were CEO Bob Collymore and Nicholas Nganga who serves as Safaricom’s Chairman, among other senior managers.

Speaking during the event, Mr Nganga highlighted the effects of the Finance Act 2018 that forced the operator to increase the billing of its products. The move, which has since received notable backlash from consumers, could not be avoided, but the telco has installed new measures to ensure that customers continue to enjoy services at affordable pricing and creating value for Kenyans.

Nonetheless, the telco’s net profits hit KES 31.5 billion for the half year ending September 30, a 20.2% jump from KES 26.2 billion it registered in the preceding year.

Competition debate

Mr Nganga spoke about the competition study that has evoked several discussions in the mobile telecoms business. While the Communications Authority has not implemented that recommendations put forth by Analysys Masons that was contracted to look into the competition space, Safaricom continues to maintain its position that it should not be punished for being successful and that any interventions pursued by the Authority should support innovation and investment.

“While we await the recommendations following stakeholder submissions made before the committee, it is our hope that this matter will be handled with the interests of Kenyans at heart,” concluded Mr Nganga.

Top taxpayer

According to Mr Collymore, Safaricom paid KES 48 billion in taxes (KES 18.8 billion in income tax, KES 13 billion in duties, KES 10.56 billion in VAT and KES 5.6 billion in fees paid to the ICT regulator the Communications Authority) for the half year under review. This makes it one of the top high-value taxpayers in the country and aligns its commitment to transforming lives.

What is more, Safaricom contributed 6.5% of Kenya’s GDP that was primarily sourced from customers who accessed its voice, data, SMS and M-PESA products.

Fixed Internet

Safaricom’s FTTH product continues to grow after the telco rolled out an extra 800km of fibre to hit a new 5500km mark. The additional mileage has covered new 30,000 homes, bringing the total number of served households to over 200,000.

The product has also connected 2000 buildings.

Partnership with Western Union

Now, M-PESA users will be able to send money to any person or business across the globe thanks to a new partnership with Western Union. This is a notable development in the payment space that will complement the service that allowed Western Union customers to send cash to M-PESA only.

Recipients will then withdraw funds from banks or more than 500,000 Western Union outlets around the world.

The official announcement will be unveiled in the coming days, and we hope to get more details then.

Masoko turns one

Safaricom’s e-commerce site Masoko has been around for one year now. The platform is reported to have made notable strides after a slow start due to logistics issues. According to Mr Collymore, Masoko has delivered products to all counties and is working with 120 active vendors and more than 30,000 SKUs.

The platform, which is developing credit purchase solutions (to be rolled out in the future), is in the process of working with merchants who produce things as it targets to build their capacities and develop additional offerings on the ground.

Revenue summary

M-PESA was the primary driver of growth for the period under analysis as it accounted from almost two-thirds of the 7.7 percent point increase. On the whole, the product accounts for 30 per cent of the telco’s service revenues.

Mobile and fixed data contributed 16.5 percent and 3.3 percent of Safaricom’s service revenues.

Reverting to M-PESA, most of the product’s revenues were sourced from withdrawals, followed by person-to-person transfers.

Perhaps the most notable jump was recorded for Lipa na M-PESA services, which grew by 50% YoY.

“There was a significant acceleration in growth across all areas. Lipa Na M-PESA revenues have returned to growth this year following the investment made last year, recording an increase of 49.9% YoY compared to 0.9% last year,” noted Safaricom CFO, Sateesh Kamath.