Safaricom profits drop for a second time consecutively
Safaricom Kenya has recorded a drop in profits for the second time in a row, following heavy investment in Ethiopian operations.
In the financial results for the full year 2021/2022, the giant telco recorded a 1.7 per cent decline in profits to Ksh67.50 billion, which has been attributed to the impact of Ksh4.66 billion financing costs for the Ethiopia business.
Safaricom Kenya, excluding Ethiopia's financing costs of Ksh4.66 billion, recorded a growth of 12.1 per cent rise in net income to Ksh77.01 billion.
"We have made significant progress towards a commercial launch. We are engaging with the Ethiopian Communications Authority and other relevant partners about the requirements for ensuring a commercial launch this year," Safaricom CEO Peter Ndegwa said.
In the first financial results that included Ethiopian operations, Safaricom's service revenue grew by 12.3 per cent to Ksh281.11 billion while Earnings Before Interest and Tax (EBIT) went up by 13.5 per cent to Ksh109.13 billion.
Voice service revenue grew by 0.8 per cent to Ksh83.21 billion while mobile data revenue grew by 8.1 per cent to Ksh48.44 billion.
M-Pesa revenue recorded the highest growth of 30.3 per cent to Ksh107.69 billion, cushioning the telco against a massive decline in profits.
In the period under review, Safaricom invested a total of Ksh49.78 billion in Capital Expenditure (CAPEX), Ksh39.34 billion being in Kenya and Ks10.44 billion in Ethiopia. CAPEX entails maintenance and network upgrade and expansion operations.
Despite increasing its customer base by 6.4 per cent to 42.44 million in one-month active subscribers, M-Pesa, which generated the most revenue, had 30 million monthly active customers.
In Ethiopia, the telco revealed that in readiness for the commercial launch, Safaricom Ethiopia has recruited a team of over 300 staff, with plans of reaching 1,000 in the next financial year.
Safaricom Ethiopia has also secured approvals for tower development, built two data centres, made the first test call, sent out the first test SMS and completed the first data session.