Safaricom half year net income hits sh33.07 billion

The telco’s COVID-19 support to the country weighs on business performance but they are banking on sustained investment to support customer growth.

Safaricom (NSE: SCOM) half-year net income hit sh33.07 billion as they mark their 20th anniversary.

Safaricom Chief Executive Officer Peter Ndegwa announced that the year 30th September 2020 saw net profit decreased by 6.0 percent to sh33.07 billion with service revenue hitting sh118.41 billion.

“Our business has proved to be resilient despite tough operating conditions. There is no doubt that COVID-19 has dealt a huge blow to many people not just in Kenya, but across the globe. This has been a tough period for businesses—small and large alike—and our customers. We are committed to walk through this journey together,” noted Mr. Ndegwa.

The company recorded a 4.8 percent drop in Service Revenue, Safaricom increased capital expenditure by a quarter to sh22.75 billion, signaling investment commitment to building a network infrastructure that supports the country’s economic development.

Voice service revenue dropped by 6.5 percent to sh40.19 billion while M-PESA revenue dropped by 14.5 percent to sh35.89 billion.

Michael Joesph, the Chairman, Safaricom Board of Directors said “The Board is encouraged by the positive trajectory witnessed going into the second quarter of our financial year. We remain steadfast in ensuring management continues to build on the strong company position that has been established over the last 20 years, running a purpose-driven business, that continues to transform lives and drive future growth.”

The telco also announced plans to provide 100 percent 4G network coverage across the country by end of this year as part of its growth strategy focused on being the technology partner of choice.

It has embarked on its next phase of growth that will be driven by a vision to become a purpose-led technology company by 2025.

“As we go into our third decade as an organization, we aim to create a technology business by developing new digital ecosystems in health, agriculture and education sectors as we aim to provide digital solutions for our customers,” added Mr. Ndegwa.

The continued focus on customers led to a 10.2 percent increase in one-month active subscribers for the period, with customers growing across all revenue streams.

With the new business strategy and the renewed focus on the customer, Safaricom expects to build on this momentum that has been gained during the second quarter of the period under review.

“Among the customers, we will prioritize includes MSMEs & SMEs who we will empower through tailor-made services and products to enable these entrepreneurs to manage their businesses better. This includes the innovative product, Pochi la Biashara, that will allow them to separate business and personal wallets and Lipa Na M-PESA Merchant App that enables small businesses to effectively manage their business tills,” said Mr Ndegwa.

KEY HIGHLIGHTS

  • 10.5 percent decline in EBIT (Earnings before Interest and Tax) to sh44.97 billion with an EBIT margin of 36.3 percent, down 2.5ppts YoY.
  • Net Income reduced by 6.0 percent to sh33.07 billion.
  • Free Cash Flow down 36.8 percent to sh23.60 billion.
  • Service revenue contracted by 4.8 percent to sh118.41 billion.
  • Voice service (outgoing) revenue reduced by 6.5 percent to sh40.19 billion.
  • M-PESA revenue dropped by 14.5 percent to sh35.89 billion.
  • Mobile data revenue increased by 14.1 percent to sh22.23 billion.
  • Messaging revenue declined by 6.9 percent to sh7.19 billion.
  • Total one-month active customer base increased by 10.2 percent to 30.31 million.
  • One-month active M-PESA customers increased 13.5 percent to 26.79 million.
  • One-month active mobile data customers increased 11.6 percent to 22.91 million.

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