Safaricom Posts First Net Profit Decline in Nine Years.

Kenya’s telco, giant Safaricom has posted its first decline in full-year profits in nine years.

The decline is attributed by reduced voice messaging and M-Pesa generated revenue at the wake of free mobile money transfers of Ksh 1000 and below during the first months of the covid-19 pandemic. “The Covid-19 pandemic brought about socio-economic challenges that disrupted our customers strained the consumer wallet and businesses across the country. We were not spared either,” said Peter Ndegwa, Safaricom CEO on Thursday.

The net profit for the financial year ended March 2021 dropped by 6.8 percent to Ksh 68.67 billion ($641 million) from Ksh 73.65 billion ($687.9 million) in 2020.

The last time Safaricom recorded a loss was back in March 2012 when it posted a 4.03 percent fall in net profit to Ksh 12.63 billion. From then on, the telco giants have been recording profits.

During the financial year ending March 2021 review, voice revenue dropped by 4.6% to Ksh 82.55 billion while messaging revenue dropped by 11.7% to Ksh 13.6 billion.

M-Pesa revenue accounted for approximately a third of total revenue and declined by 2.1 percent. This is equivalent to Ksh1.79 billion ($16.7 million). This came around at the back of Safaricom reducing transfer rates of Ksh 1000 and below to 0 shillings from Mid-March to December in 2020.

M-Pesa revenue declined by 14.5% in that duration but after the zero charges lapsed, it recovered by 10.1%.

Total revenue grew by 0.6% to Ksh264.02 billion. This was facilitated by growth in mobile data, fixed service and wholesale transit. Increased costs however increased pressure at the bottom-line.

Direct costs rose by 7.1% or Ksh5.3 billion ($49.5 million) to Ksh80.15 billion ($784.7 million) while the expected credit losses—an estimate of the outstanding payments that it does not expect to recover— rose 1.8 times to Ksh3 billion ($28 million).

Safaricom board has recommended a final dividend of Ksh 0.92 per share amounting to Ksh36.86 billion ($344.3 million), bringing the total payout for the year to Ksh54.89 billion ($512.7 million).

The telco had earlier paid an interim dividend of Ksh0.45 per ordinary share amounting to Ksh18.03 billion ($168.4 million).

The current year’s total payout is a slight drop from last year when shareholders received Ksh56.09 billion ($523.9 million).

Article by Joy Ngoiri