Safaricom half year profit drops by Sh. 3.5 billion

Safaricom has posted a drop in its net profit for the first six months of its current financial year.

The telecommunications giant has recorded a 10 per cent drop in net profit to Sh. 33.5 billion.

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In the same period the previous year, Safaricom had posted a 12.1 per cent increase in profit to Sh. 37.056 billion compared to Sh. 33.07 in 2020.

Total revenue rose by 4.6 percent to Sh. 153.4 billion in the period, helped by an 8.7 percent increase in M- Pesa revenue to Sh. 56.9 billion, and an 11.3 percent jump in data earnings to Sh. 26.3 billion.

Voice revenue fell by 3.8 percent to Sh. 39.9 billion, while total costs rose by a third to Sh. 31 billion.

Safaricom partially attributed the drop in profitability to the reduction of mobile termination rates (MTR rates). According to Safaricom chief executive officer Peter Ndegwa, this reduction has cost Safaricom Sh. 500 million in the two months it has been in place.

“Given the impact of the MTR rates from 99 cents to 58 cents, a slowdown in business operations due to the elections period, increase in excise duty on sim cards and mobile phones and a failed rain season leading to more economic hardship for the country, Safaricom has done well to deliver solid revenue growth and a net income that is within the expected range,” said Ndegwa.

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Ndegwa added that the company’s profits were weighed down by the expansion into the Ethiopian market.  He revealed that Safaricom had invested $598 million in Ethiopia operations.

However, the investment was promising due to the early uptake of services in the new market. Safaricom Ethiopia generated Sh. 98.3 billion in total revenue in the first month of operation.

At the same time, Safaricom Ethiopia had acquired 740,000 subscribers by the end of October.

In Kenya, net income grew by 0.6 per cent year on year supported by the 4.6 per cent growth in general revenue.