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Safaricom posts 6% decline in profits as COVID-19 gnaws

Telecommunication giants Safaricom have recorded a 6% drop in their half-year profits.

Safaricom reported a Sh33 billion half-year profit for the period ending 30th September, 2020, compared to Sh35.2 billion recorded over the same period last year.

M-Pesa is the most impacted segment, posting a year on year decline of 14.5%.

According to Safaricom’s Acting Chief Finance Officer Ilanna Darcy, the decline in M-Pesa revenue was as a result of the zero-rating of cash transfers below Sh1000. M-Pesa revenues declined to Sh35.9 billion from Sh42 billion last year.

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In a period when Safaricom also recorded a drop in voice revenue (phone calls), Darcy says that the negative will be offset by the 14.1% growth in mobile data the company has recorded.

“Customers consuming more than 100mbs and active 4G devices grew at a much faster pace of 8% and 16% respectively, thus signifying an increase in data penetration in the period,” noted Darcy.

Data increased by Sh1.2 billion, while voice declined by Sh0.7 billion. The decline in voice was attributed to the reduced calling patterns among Kenyans during the COVID-19 pandemic.

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Key Highlights

  • 5% decline in EBIT (Earnings before Interest and Tax) to KES 44.97bn with an EBIT margin of 36.3%, down 2.5ppts YoY.
  • Net Income reduced by 6.0% to KES 33.07bn.
  • Free Cash Flow down 36.8% to KES 23.60bn.
  • Service revenue contracted by 4.8% to KES 118.41bn.
  • Voice service (outgoing) revenue reduced by 6.5% to KES 40.19bn.
  • M-PESA revenue dropped by 14.5% to KES 35.
  • Mobile data revenue increased by 14.1% to KES 22.23bn.
  • Messaging revenue declined by 6.9% to KES 7.19bn.
  • Total one month active customer base increased by 10.2% to 30.31m.
  • One month active M-PESA customers increased 13.5% to 26.79m.
  • One month active mobile data customers increased 11.6% to 22.91m.

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