Oral East Africa>4GB per customer data fails to stop Safaricom profit drop At the hut of the story

Written by Oral East Africa

Safaricom shares dropped 3 percent after the teclo announced a decline in profits following the depreciation of the Ethiopian currency, where the company operates a mobile money and telecoms subsidiaries.

Kenya’s leading teclo posted Kes10 billion net profits for the half year a 63 percent decline from Kes27.1 billion in a similar period last year blaming the drop on the regional hit.

The company stock prices slightly dipped to Kes15.95 a share yesterday from Kes16.4 on Wednesday closing wiping out Kes20 billion in market capitalization.

In Ethiopia, the Ethiopian Birr depreciated by 106 percent, as of 30 September 2024, the Birr’s value against the US Dollar was 118.99, a significant decrease from 57.69 in June 2024. This saw the unit post a loss of Kes19.3 billion in the half year compared to the Kes7.4 billion loss a year earlier.

Passing on currency losses

Safaricom says it has been forced to renegotiate foreign currency-denominated contracts including the leases while onboarding local suppliers for certain products and services to reduce foreign currency costs.

The telco has also begun cutting down on expatriate staff and increasing the costs of services in Ethiopia to pass of the currency losses to consumers.

The setback in Ethiopia was offset by stronger growth at home where the Telco recoded a 13 percent jump in service revenue to Kes179.9 billion driven by Kenyans' love for the internet and sustained M-Pesa transactions.

Rise of mobile data

Safaricom’s M-Pesa revenues improved to Sh77.2 billion from Sh73.7 billion on improved customer usage while voice, mobile data and fixed data revenues, grew to Sh91.3 billion from Sh90.8 billion.

“As we forge ahead, we continue to innovate and expand our product propositions to explore new growth areas even as we protect our ‘core.’ We continue to leverage technology as a catalyst to accelerate growth while ensuring sustainability of our investments and our business,” Safaricom ceo Peter Ndegwa said.

“By the end of this year, we want to embed customer-first tech capabilities within our systems and network, with our customers enjoying a seamless digital-first experience,” he said.

Mobile data which now accounts for 20.0 percent of Service Revenue looks set to outgrow voice and messaging revenue which now accounts for 26.4 percent of service revenue. Only M-PESA is King as it accounts for 43.5 percent of service revenue.

Local assembly drives handsets

Safaricom revealed that each customer was using 4.1 gigabytes of data each, a jump from 3.8 GB in a similar period last year, which helped the telco record a double-digit growth of 20.2 percent in mobile data revenue to Kes35.55 billion.

The growth has also been fueled by increase in customers, device penetration, provision of the right content to encourage usage, personalized offers through data and analytics and our CVM initiatives. Distinct bundle users went up by 10.2 percent to 20.76Mn customers.

Safaricom continues to drive the penetration of 4G-enabled mobile devices through device financing program in addition to cheaper 4G devices assembled through their East Africa Device Assembly Limited Kenya (EADAK) factory launched on 30 October 2023.

The number of smartphones on Safaricom network grew by 15.7 percent to 24.72 million with 4G devices rising by 33.5 percent to 19.22 million with 50.3 percent of customers using more than 1GB while 5G devices increased by 64.1 percent to 836.55k.

Government agency

The next phase for Safaricom digitization growth is now centered on linking the Kenyan and Ethiopian governments to their population, accessing the lucrative business of facilitating payment for state services.

Through Safaricom platforms, they are enabling customers to access e-services for business and government services in areas such as health, credit, women empowerment, agriculture amongst others.

During this period, Safaricom said they continued to collaborate with the Governments of Ethiopia and Kenya to build digital and connectivity infrastructure, enhance financial services technology as well as enhance provision of public services.

By 2030, the company wants to be known as the tech and financial services partner of choice for enterprises and the public sector through innovative and secure technology solutions.