The Key Numbers from the report:
- Net income increased by 3.0% to KES 74.5 billion.
- Service revenue increased by 5.2% to KES 295.7 billion,
- Voice revenue declined by 2.6% to KES 81.1 billion.
- Mobile data revenue grew 11.4% to KES 54.0 billion
- M-PESA revenue grew 8.8% to KES 117.2 billion.
The business is stable and regained solid positive momentum in the year’s second half. The stability was reinforced with the news that the CEO is not leaving.
”We have delivered a solid set of results despite the tough operating environment occasioned by the slowdown in business activity in an election year in Kenya, tough macro environment as well as changes in mobile termination rates which impacted our voice revenues significantly. The business is stable and regained a strong positive momentum in the second half of the year. Looking into the future, we passionately believe that our business is well-positioned to support our customers and provide technology solutions as we transition into a purpose-led technology organization in line with our 5 YR strategy,” Peter Ndegwa, Safaricom PLC CEO said.
Here are our key takeaways from the investor briefing.
1. Safaricom Obtains M-Pesa License for Ethiopia
Probably the biggest news was that Safaricom Ethiopia has officially been granted the license to operate mobile money services in Ethiopia. It is important to note that the license comes only seven months after the commercial launch of GSM services.
The one-time license fee cost $150 Million. For sure, this is a huge investment and shows the confidence the telco has in its mobile money platform.
Safaricom will roll out M-Pesa services to its Ethiopian Customers in the second half of the year 2023.
2. Safaricom Ethiopia is Making Losses
Safaricom Ethiopia is Safaricom’s biggest start-up venture. Since launching in October Safaricom Telecommunications Ethiopia added close to 3 million Customers.
The telco has invested heavily in building a distributor network of over 114 outlets and has 22 cities and regions.
Despite the volatile political climate in the country, the company has grown to 900 members of staff, 81% being Ethiopian nationals.
However, Safaricom Ethiopia is still a start-up, and every company in their start-up phase makes losses. It’s projected that the current financial year 2024 will be its peak loss-making year.
CEO Ndegwa stated: “Ethiopia is forecast to record its highest start-up costs in FY24. We are keen to accelerate our operations in Safaricom Ethiopia, we aim to reach 10 million customers”
All is not gloom, Safaricom’s CEO and board are confident that their investment will soon break even and be an extremely successful venture.
Peter Ndegwa, Safaricom PLC CEO said: “Since the commercial launch in October, the brand is visible, deeply rooted in Ethiopia, and quickly becoming in every sense fabric of the society. The potential for Ethiopia is immense and we look forward to the future with optimism and excitement.”
3. Merchant Credit Overdraft Facility Projected to Grow
Safaricom Merchant services (Till Number, Paybill, and Pochi La Biashara) have been popular with businesses of all sizes.
The telco launched its merchant overdraft facility to match Fuliza, a popular overdraft among regular customers.
Currently, 73000 merchants have opted in for the credit overdraft facility. This number is against the 600,000 merchants who are currently registered on the platform.
CEO Peter Ndegwa stated “I have been told we will hit 100,000 soon.”
4. Safaricom Home Now in 18 Counties
Safaricom Home has been expanding and the fibre network is now in 250,000 homes across 18 counties.
The company projects it can get 1 million homes connected on the Safaricom home network.
For the company to connect homes it needs to have its fibre network pass the homes.
Currently, they have passed 450,000 homes. They are working to pass more homes so that they can hit their 1 million connected homes target.
5. 5G will grow but cost is a factor
Safaricom is looking to grow its 5G network even more during this financial year. 5G which is succeeding 4G LTE, has been rolling out slowly in the country.
The company noted that the cost of setting up 5G sites is still high and this is a factor in scaling. It is also important to note that the majority of the customers don’t have 5G phones.
Current 5 G-enabled mobile phones are still costly for the majority of Safaricom’s customer base.
Safaricom believes that the initial use case for its 5G network will be fixed wireless.
The telco will bank on this as it seeks to partner with the Kenyan government to increase connectivity across the country. The current Kenyan government has internet connectivity as one of its key campaign promises.
Safaricom also plans to supplement its fibre network with its fixed wireless network.
6. 4G Growth
Despite the rollout of the 4G network across the country, only 16% of Safaricom’s customers have 4 G-enabled phones.
The CEO Peter Ndegwa, was clear that they intend to double the number within this current financial year
7. eSims Will Come
Safaricom is aware that there are customers who would like to move to eSims. The company sees this as a plan and is not in its short-term plan.
This is no surprise as based on their numbers, only 7% of devices on their network can use eSims currently.
8. Expect Changes to M-Pesa Passwords
Safaricom always works to make its customers feel safe. We have seen this with the recent MySafaricom App update on Fuliza.
They are now working on strengthening the M-Pesa password.
Asked whether they will obscure passwords, Adil Arshed Khawaja (MBS chairman of Safaricom board stated: “Expect an announcement in the course of the year”.