Safaricom profit falls to Ksh.68.7B, first annual dip in a decade

Safaricom Plc has posted a 6.8 per cent dip earnings for its financial year ending in March 2020 with profits falling to Ksh.68.7 billion from Ksh.73.6 billion last year.

This is the telco operator’s first annual profit dip in a nearly decade since the year closing in March 2012.

The marginal decline in earnings for the operator is largely attributable to the waiver of fees on mobile money transactions of up to Ksh.1000 between the end of March and December last year.

M-Pesa earnings in the year shrunk marginally by 2.1 per cent to Ksh.82.6 billion from Ksh.84.4 billion previously despite a strong recovery in the income head in the second half of the telecom’s financial year.

Revenue from voice was similarly depressed in the year, dipping slightly to Ksh.42.4 billion from Ksh.43.5 billion a year earlier.

Nevertheless, Safaricom has booked strong growth in both mobile data and fixed service including fiber to the home (FTTH) to nearly offset declining income from M-Pesa and voice.

Earnings from mobile data for instance recorded a double digit growth at 11.5 per cent to Ksh.22.6 billion on an accelerated penetration of the firm’s 4G network flanked by device financing support to customers.

Fixed data revenue meanwhile rose by 6 per cent to Ksh.9.5 billion on the momentum of FTTH which came on the back of a rise in home schooling and work from home arrangements triggered by the COVID-19 pandemic.

The management of Safaricom has termed the performance of the firm as solid amidst disruptions occasioned by the global health crisis on its business.

“We started our financial year in a lock-down and ended the year in another lock down. The board takes note of our business resilience especially a rebound in growth in the second half of the year. This has given us the opportunity to support our shareholders at this difficult time,” said Safaricom Chairman Michael Joseph.

“We have invested Ksh.339 million in supporting the country through our different foundations in addition to the free mobile-money transfers. Our most critical support however was keeping our network stable,” added Chief Executive Officer Peter Ndegwa.

In spite of facing a turbulent year, the board of Safaricom has recommended the payment of 92 cents final dividend per share for a combined share holder payout of Ksh.36.9 billion.

This to follow up a surprise Ksh.18 billion interim pay out to shareholders representing 45 cents per share announced in February.

This means that shareholders of the telco will walk away with dividends totaling to Ksh.54.9 billion despite a tough operating environment for the firm.

Safaricom is expected to spend between Ksh.40 and Ksh.43 billion in the new financial year and expects its pre-tax earnings to bounce back to between Ksh.105 and Ksh.108 billion from Ksh.96.2 billion.