Safaricom posted Sh33.1 billion profit after tax for the first half of the 2020/2021 financial year in a six per cent decline from Sh35.2 billion last year.
The telco’s board attributed the subdued performance to the global coronavirus pandemic responses which hit the telco’s revenue streams particularly its lucrative M-Pesa cash transfer platform.
It also happened to be the first time Safaricom has reported a dip in profits since 2012, revealing the impact of State-driven waiver of fees and transaction charges meant to cushion Kenyans from the effects of the disease.
“Zero rating of M-Pesa transactions had a significant impact on M-Pesa revenue which declined 14.5 per cent year on year,” said Safaricom Chief Executive Officer Peter Ndegwa.
Overall, the firm’s revenue fell by 4.1 per cent to Sh124.5 billion from Sh129.9 billion last year during the period under review.
During the six months up to 31st September 2020, service revenue declined by 4.8 per cent to Sh118.4 billion from Sh 124.3 billion recorded in 2019.
The board observed that except for mobile data, all other major sources of revenue registered a decline, an indication that the Covid-19 pandemic had taken a huge toll on the giant telco.
Voice revenue declined 6.5 per cent to Sh40.2 billion down from Sh43 billion same time last year.
Messaging revenue too declined 6.9 per cent to stand at Sh7.2 billion down from Sh7.7 billion.
Only mobile data registered an increase in revenue jumping from Sh19.5 billion last year to Sh22.2 billion, a 14.1 per cent increase.
Despite the decline in revenue and profit, money remitted to the government as duties, taxes, and license fees increased by Sh750 million to stand at Sh59.6 billion up from Sh58.85 similar period last year.
This is a welcome boost for the National Treasury which is struggling to raise revenue amid an economy battered by the pandemic.
Increased M-pesa transactions
Further, the total value of transactions made on M-Pesa grew by 32.9 per cent compared to same time last year to Sh9.4 trillion.
Similarly, the volume of M-Pesa transactions grew 14.9 per cent compared to same time last year to stand at 5.12 billion transactions.
Despite the dip in revenues the company is exuding confidence that it will still be in a position to pay dividends.
In April the company announced it would pay Sh56 billion as dividends for financial year 2019 after its profits rose 19.5 per cent to stand at 74.7 billion up from Sh62.49 compared to 2018.
“It will not impact our ability to pay dividends,” said Ilana Darcy Chief Finance Officer .
Going forward the company intends to become a fully fledged technology company and expand its operations within the regions into new markets such as Ethiopia.
Currently at 91 per cent coverage, Safaricom plans to extend 4G coverage to the entire country by the end of the year, according to Ndegwa.
“I aim to create a technology business by going beyond in new borders and boundaries, developing new digital ecosystems in health, agriculture and education sectors as we aim to be the technology partner for our customers,” said Ndegwa.
Safaricom, the largest company in East Africa, remains a top taxpayer having paid Sh869.10 billion in duties taxes and fees since inception.