Safaricom profit drops 6pc to Sh33bn on free M-Pesa transactions


Safaricom Chief Executive Officer Peter Ndegwa. FILE PHOTO | NMG

Safaricom #ticker:SCOM half-year net profit fell six percent to Sh33.07 billion with M-Pesa revenue dropping the most on account of free transactions to support customers during Covid-19 period.

The results, covering between April and September also saw voice and messaging revenue dip in the period that coincided with rising Covid-19 infections that forced the state to enforce disruptive measures such as curfew and ban on social gatherings.

M-Pesa revenue dropped by Sh6.08 billion while voice and messaging revenues dipped by Sh2.79 billion and Sh0.53 billion respectively, contributing to a drop in service revenue. 

CEO Peter Ndegwa on Monday described the performance as “good” given the massive disruption that the infectious virus has had on households and businesses.

“It has been a good half-year and we are seeing improvement in the second half. However, we know Covid-19 disruption is not over given the resurgence in infections,” said Mr Ndegwa.

“Our business has proved to be resilient despite tough operating conditions. There is no doubt that Covid-19 has dealt a huge blow to many people not just in Kenya, but across the globe.”

M-Pesa revenue dropped by 14.5 percent to Sh35.89 billion despite the value of transactions rising by 32.9 percent to Sh9.47 trillion.

The drop was on account of the decision to zero-rate fees on transactions of Sh1,000 and below to reduce cash handling in Covid-19 environment.

“We have seen increased activity in the M-Pesa eco-system as customers take advantage of the free fees on person to person and Lipa na M-Pesa transactions below Sh1,000 and M-Pesa wallet to bank and bank to wallet transfers,” said the telco. 

However, the telco benefitted from the increased number of people who were working from home to lower risks of contracting the infectious virus.

Mobile data revenue grew by 14.1 percent to Sh22.23 billion while fibre to home revenues rose by 47.2 percent to Sh1.64 billion.

Safaricom says that uncertainties still persist for the full year given the recent surge in infections, the continued zero-rating of M-Pesa transactions of Sh1,000 and how customers will react when charges are reinstated.

The telco says it expects earnings before interest and taxes to be in the range of between Sh91 billion and Sh94 billion, a decline of 10.5 percent to 7.5 percent.