Safaricom will take over sh16.5 billion loss in revenue over the waived transaction fees of below sh1000.
This is because Central Bank has announced that the measures announced on March 16th to support the COVID-19 through cashless payments to curb the spread of the virus will continue until December 31st.
In April in an interview with Citizen TV, Peter Ndegwa the Safaricom CEO said the initial three months would cost them sh5.5 billion. The extension would triple the period to nine months, also tripling the revenue loss the telco will face.
When he was interviewed he however said “The key is to ensure we can support our customers to get through this crisis. When Kenya gets back on track, our business should get back on track”.
The initiative was to end on June 30th.
A loss in revenue of sh16.5 billion is close to 22 per cent of M-Pesa’s annual sales, which in the year ended March 2019 was a third of the revenues.
Safaricom recorded Sh240.3 billion in revenue.
For the year ended 31st March 2020, M-Pesa revenue grew by 12.6 per cent to sh84.44 billion.
But the telco hopes to turn other revenue generating products like data to increase their revenue share and potentially reduce the revenue loss accrued from this COVID-19 support.
“We want to democratize the use of data, whether it’s for education or other uses,” Mr. Ndegwa added.
The company stated that on average their customers are now using more than 1 GB per month. Mobile data achieved double digit revenue growth of 12.1 per cent for the year and now accounts for 16.2 per cent of Service Revenue.
In the period, growth in mobile data was driven by increased smartphone penetration and usage and a 28.3 per cent reduction in effective rate per MB.
In addition, fixed service revenue registered a growth of 10.7 per cent and contributes 3.6 per cent of total service revenue in the period. Fixed revenue is driven by increased activity and penetration of its fiber network.
This could further be deepened with more Kenyans working from home and seeking more information on the pandemic hence allow the company shield the revenue loss.
“It is important to point out that our most critical support to the country remains ensuring network stability to support the usage in M-PESA, voice, SMS and data. We have the responsibility to keep the country connected”, Ndegwa noted in his remarks when releasing the results in April this year.