Safaricom half-year profit drops to Sh33.5bn on Ethiopia entry costs
Safaricom Plc chairman John Ngumi (left) and the chief executive officer Peter Ndegwa during the announcement of the telco's half-year results at the Michael Joseph Centre in Nairobi on November 11, 2022. PHOTO | DIANA NGILA | NMG
Safaricom's net profit for the six months ended September fell by 10 percent to Sh33.5 billion on the impact of a cut on the mobile termination rate (MTR) and higher costs associated with the entry into Ethiopia.
Total revenue rose by 4.6 percent to Sh153.4 billion in the period, helped by an 8.7 percent increase in M- Pesa revenue to Sh56.9 billion, and an 11.3 percent jump in data earnings to Sh26.3 billion.
Voice revenue fell by 3.8 percent to Sh39.9 billion, while total costs rose by a third to Sh31 billion, largely on the back of the firm's investment in its new Ethiopia subsidiary.
The company also pointed to a tough macroeconomic environment for the slowdown in earnings, where high inflation arising out of global shocks has slowed down consumer spending.
"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 Safaricom chief executive officer Peter Ndegwa on Friday.
The company said that the cut in MTR punched a Sh500 million hole in the company's revenue in the two months that the new interim rate has been in place.
In Ethiopia, the company said that it had acquired 740,000 subscribers by the end of October, generating Sh98.3 million in revenue from the market in the first month of operations.
The sale of handsets has been the biggest contributor to Ethiopia's revenue, with service revenue from the new market amounting to Sh9.1 million.
