Safaricom has revealed its HY results ended in 30 September 2020 for the 2020/2021 financial year.
In a livestream showcased on its YouTube channel and other platform like Zoom for blogger questions, the operator reports that the COVID-19 pandemic has weighed on business performance, although it sustained investment to support customer growth.
First, the carrier’s service revenue dropped by 4.8% YoY to KES 118.41b. Profits before interest and tax dropped nu 10.5% to KES 44,968.0m.
The show also saw Acting CFO Illanna Darcy present the financial results following the departure of Sateesh Kamath to Vodafone.
A decline in voice and SMS
The operator makes a lot of money from voice and messaging services. Both, however, registered a 6.5% and 6.9% decline, respectively.
Safaricom says this is due to growth in customer usage that is offset by continued downward movement on the effective rate per minute.
The decline in SMS usage is not isolated to Safaricom because it matches global trends and usage patterns that prefer online messaging services.
A decline in M-PESA, a first for the company
The telco mobile money product M-PESA has also registered a dip in profits for the first time.
A CBK directive compelled mobile money products to zero-rate person to person transfers of under Kes 1000, as well as bank to M-PESA and wallet to bank transfers.
Other services that were zero-rated are paybill tolls for government hospitals to avoid handling of cash.
These products and their associated services make M-PESA billions in terms of transaction fees.
These measures were put in place to address the effects of the pandemic, and should be lifted before 2021.
According to CEO Peter Ndegwa, “This has been a tough period for businesses and our customers and we committed ourselves to walk through this journey together. During this period, we took several initiatives to support our customers and the government to pull through this pandemic.”
The developments saw the M-PESA platform register a drop in revenues by 14.5% YoY.
However, the total M-PESA transaction value grew by 32.9% YoY to KES 9.04 trillion. The volume of M-PESA transactions grew to KES 5.12 billion transactions.