Safaricom has announced the financial results for the first six months of FY23. The announcement was made at Safaricom’s Michael Joesph Centre, where the media also got to meet the Board Chair, Mr. John Ngumi who replaced Michael Joseph in August. He has not been making public appearances at past events, including the 5G and Ethiopia.
Nonetheless, the results are remarkable for a telco of Safaricom’s caliber, although it also experienced business challenges such as risk in the telco industry, geopolitical tensions, and elevated inflationary pressures negatively impacting consumer purchasing power.
Here are some key highlights from the announcement:
Service revenue grew 4.6% to KShs 144.8B YoY in HY23, supported by M-PESA, Mobile Data, and Fixed Data growth. Safaricom adds that the revised Mobile Termination Rates (MTR) from KES 0.99 to KES 0.58 impacted its performance. Adjusted for this, Service Revenue grew 5.0% YoY.
Service Revenue in H1 FY2 includes KES 9.1M from Ethiopia, generated in the first month since the beginning of a phased network rollout plan in Ethiopia on 29 August 2022.
Overall customers grew 2.9% YoY to 43.17M while one-month active customers grew 2.3% YoY to 32.47M.
Voice and SMS
Safaricom has been struggling to make more money from voice and SMS, but that has not been the case in the last couple of quarters. The telco knows that customers are transitioning to data services, choosing to communicate using data other than airtime (for calls and messaging). It is partly for this reason that data revenue has been growing (more of that in a few).
Expressly, voice revenue declined by 3.8% YoY to KES 39.88B while messaging revenue decreased by 7.7% YoY to Kes 5.42B. To note, this issue is not limited to Safaricom, but other telcos across the globe.
Data from telco regulator the Communications Authority for Q4 2021/22 shows that Safaricom’s voice traffic and SMS market share is at 66.1% and 90.3% respectively as of June 2022. Voice and messaging revenue account for 31.3% of service revenue.
M-PESA
It has become apparent to customers and stakeholders that Safaricom makes a killing from its mobile money product, M-PESA.
To this end, the telco reports that M-PESA revenue grew by 8.7% to KES 56.86B supported by increased usage and growth of chargeable transactions per customer growing 16.3% YoY.
One-month active M-PESA ARPU grew 2.1% YoY to KES 307.06.
Velocity in the ecosystem continues to grow with total M-PESA transaction value and volume both growing at 32.0% YoY to KES 18.09Trn and 9.60B respectively.
M-PESA wallet-to-bank and bank-to-M-PESA wallet transactions continue to be free and accounted for 20.6% of the total value of M-PESA transactions and 4.0% of the total volume.
M-PESA one-month active customers grew by 2.48 million active M-PESA customers to 31.17M.
M-PESA is now a universal payments network with full Merchant and Pay Bill interoperability.
M-PESA agents grew 2.0% to 263K while Lipa Na M-PESA active merchants grew 39.0% to 539K.
Lastly, M-PESA now accounts for 39.3% of service revenue, further complementing traditional voice and messaging services.
Mobile Data
Safaricom’s mobile data business is also one of its key revenue makers owing to the number of Kenyans who have access to smartphones that use its connection to communicate with friends and conduct business.
Thus, Safaricom reports that mobile data revenue grew 11.3% YoY to KES 26.30B returning to double-digit growth.
“We continue to deepen mobile internet penetration by enhancing our network coverage and driving smartphone penetration through ‘Lipa Mdogo Mdogo’,” says CEO Peter Ndegwa in a statement today.
Safaricom 4G coverage is now at 97% across Kenya with 6,088 4G stations on its network. Smartphones on the Safaricom network grew by 10.7% to 19.18M of which 12.11M (+24.8% YoY) are 4G devices with 52.8% (+35.3% YoY) of them using more than 1GB.
Mobile data now accounts for 18.2% of Service Revenue.
These numbers are impressive for telco, save for voice and SMS revenue that continues to decline.
There is more coverage from the Investor Briefing event, so keep refreshing this site for more information. In the meantime, find out more about M-PESA Junior Account launch, which should be happening sometime before the end of this month.
