Safaricom records 22% revenue growth in half year

Safaricom increased its customer base by 14.8 percent to 25 million subscribers after a period of lag, increasing the telco’s total revenues for the first half of its 2016 financial year by 23 percent to 97 billion shillings.

The telecommunication firm’s profit after tax increased by 22 percent to 18 billion shillings thanks to increased mobile data usage and growth in MPESA revenues.

Safaricom’s Chief Executive Officer, Bob Collymore, said the firm became aggressive in growing its customer numbers by venturing out to the county level where the majority of mobile phone users could not access their 2 g network.

Over half of Safaricom’s customer base used mobile data every month.

“We are seeing about one million people coming into the market every year roughly, young people attaining the age of adulthood. We are putting a lot more focus at a regional level. We’ve been a little more assertive in our customer acquisition,” said Bob Collymore.

In the last six months ended September 30th, Safaricom increased 3g coverage to 73 percent of the population and 4g coverage in 14 counties. The telecom giant also has a fiber network now spanning 2, 328 kilometers spread across towns.

Consequently, mobile data usage grew by 78 percent after the firm lowered its data bundle costs by 40 percent in response to consumer uproar.

Mobile data remained Safaricom’s fastest growing arm, with revenues increasing by 40.9 percent to 9.16 billion shillings. These results were achieved despite smartphone users making up just 4 million of Safaricom’s customer base.

“We accelerated our capital expenditure and invested in 20 billion shillings which was 61.7 percent higher than the same period lats year,” stated the Safaricom CEO .

Mpesa, which is now being used by 88 percent of Safaricom’s subscribers, generated 24 percent rise in revenues to 19.35 billion shillings, with 160.2 billon  real time payments per month.

Safaricom expects Mpesa to continue to contributing significantly to the bottom line despite growing competition in the mobile payments space.

Investment in the national police security system however saw Safaricom’s free cash flow decline by 38.5 percent to 9.5 billion shillings, while the weak shilling exposed the telco to 690 million shillings loss in foreign exchange trading activities.

“The shilling depreciated by 17.9% against the us dollar. Without the forex loss, the operating expense as a percentage of total revenue would have been 21.6 percent,” said Collymore.

Safaricom has, however, projected its full year net income to hit at least 35.5 billion shillings with full year free cash flow expected in the range of 25 to 26 billion shillings.