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Safaricom Full-Year Profit Hits Ksh. 55.3 Billion As CEO Bob Collymore Announces His Return

Chairman of the Board at Safaricom, Nicholas Nganga with the Director Strategy and Innovation, Joe Ogutu

Safaricom Full-Year Profit Hits Ksh. 55.3 Billion As CEO Bob Collymore Announces His Return

Elsie Ndonga by Elsie Ndonga
10 May 2018
in Brands, Business, Business Finance, News
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During the release of the Safaricom 2017/18 financial results, the company announced that their net profit had grown by 14.3% to Ksh. 55.3 billion from the Ksh. 48.4 billion recorded the previous year. This was amid the slow growth registered last year due to low credit availability and uptake, the long electioneering period and adverse effects of the weather.  Additionally, CEO Bob Collymore announced his return after a fairly long medical leave. Through a video message, he said that he would be back to work as soon as he was done with his last phase of treatment and was cleared by his doctor.

 

 

Safaricom announced that the board had recommended a dividend of Ksh. 44.1 billion which is a 13.5% increase from the previous year. As per those results, the company’s earnings per share stands at 1.38, a 19.9% increase from the previous year’s 1.15. The company’s increased earnings per share were as a result of a couple of combined factors. One of those factors includes the increase in service revenue.

Chairman of the Board at Safaricom, Nicholas Nganga with the Director Strategy and Innovation, Joe Ogutu

The company recorded a 10% increase in total service revenue. This was driven by the continuous growth of M-PESA and mobile data. M-PESA registered a 14.2% growth while mobile data registered a 24% growth in the 2017/18 financial year. Additionally, voice also grew by 2.4%. The M-PESA revenue growth was driven by 2 types of business; the traditional form of M-PESA which involved Peer to Peer money transactions and the newer businesses which include Business to Consumer, Consumer to Business and Business to business. The traditional businesses which generated 73.6% of the M-PESA revenue increased by 18%. The newer businesses which generated 26.4% of the revenue increased by 24.1%.

The M-PESA revenues stand at Ksh. 62.9 billion representing 28% of the total revenue. One the factors that contributed to the increase in revenue was the increase of M-PESA customers by Ksh. 2.1 million. The company also lowered their fee to merchants for The Lipa Na M-PESA by 50%. This was done to encourage the adoption of service by more businesses. The number of 30-day active Lipa Na M-PESA tills increased by 76. 6% over the course of the year. There were 11 M-PESA customer transactions recorded per customer per month which is a 14.6% increase from the previous year.  Registered M-PESA agents also increased by 15.5% and are now at 156,000 across the country.

Mobile data contributed to 35% of the service revenue for the year and stands at Ksh. 36.4 billion. Out of the 3.5 ppts contributed by mobile data, 1.5 ppts was driven by an increase in active data customers. The other 2.0 ppts was driven by improvement in the average revenue per user which grew by 13%. Data usage per subscriber grew by 56% to 421 MB per customer. This has been attributed to the positive adoption of the segmented marketing approach developed by the company. This includes the use of services like Flex, Blaze, Safaricom Fiber to Home, Platinum, and Tunukiwa. The mobile data compound average growth rate supporting a period of 4 years is at 61% while the average revenue per user stands at 16%.

Another aspect that contributed to the company’s increase in earnings per share was the increase in marginal expansion coupled with strong investments. The company invested in technological services such as their call centres and increased the sites privy to 4G services by 49%. Additionally, the Fiber to Home roll out now covers up to 5000 kilometres. The company also registered an increase of 1.4 million customers.

The company’s earnings before interest and tax (EBIT) grew by 18.3% with the margins improving by 2.4 ppts. The growth was driven by the increase in service revenue which resulted in 11.7% improvement in contribution margin on underlying basis resulting in an almost flat Opex intensity. The company also invested Ksh. 36.4 billion in Capital expenditure. A fifth of this expenditure went to IT development so they could give customers better-personalized services. Additionally, the investment was to serve the rapid demand for high-speed data. This created a deeper fixed network. However, even with an increase in capital expenditure, the company’s capital expenditure intensity reduced. Thus, shareholders were able to get superior returns.

The company’s cash flows were supported by strong operating performance. The EBITDA which registered Ksh. 112.8 billion reduced net debt by Ksh. 12.5 billion, paid Ksh. 38.9 billion in dividends and fund the 36.4 billion in capital expenditure.

Another major aspect that was key during the release of the results was the company’s intention to refresh ‘Twaweza’. Through this initiative, the company launched Digifarm, a site that connects farmers providing them with access to knowledge, information and credit. Safaricom also leveraged its partnerships to deliver access to quality and affordable healthcare services through the M-TIBA platform. So far over 1 million people are enrolled in the service with over Ksh. 200million paid out in more than 100k healthcare visits. Safaricom also focused on areas such as education, health, water, disaster, relief and environment conservation. Through this, over 34 schools for visually impaired students have been transformed. Also, 22,000 lives have been transformed through free medical camps.

Moving forward, the Safaricom seeks to roll out Fibre to Home to more residences, doubling the number of homes connected to the service. On their partnerships with Google Play Store and PayPal, they plan on opening up the global marketplace to both local and international buyers and sellers.

Speaking of PayPal, Online Payments: Here Is Everything You Can Do With PayPal + An Infographic

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Elsie Ndonga

Elsie Ndonga

The power of the written word fascinates me. It abides- cannot be forgotten. I write in the hopes that I can document the stories of everyone I meet and everything that I see.

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Music And Travel: KTB Needs To Promote The Safaricom International Jazz Festival – The Financial Gains Are Ridiculously High

Music And Travel: KTB Needs To Promote The Safaricom International Jazz Festival - The Financial Gains Are Ridiculously High

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