Safaricom on Monday reported Ksh33 billion in profits for the six months ended September 30 2020, reflecting a 6% drop compared to the Ksh35.2 billion profit reported at a similar period the previous year.
Profits before tax also ticked down by 12.8% in the first half of 2020 to Ksh44.7 billion down from Ksh51.3 billion posted at the same juncture the previous year.
Earnings Before Interest and Taxes (EBIT), used to measure a firm’s profitability were down to Ksh45 billion in the concluded half year down from Ksh50.2 billion.
The company’s revenues were significantly affected by COVID-19, most notably by interventions rolled out by the government following the outbreak of the pandemic.
The Central Bank of Kenya (CBK’s) move to zero-rate M-PESA transactions below Ksh1,000 came back to haunt the telco as M-PESA earnings slumped by 14.5% to Ksh35.9 billion from Ksh42 billion during the comparable periods under review.
Speaking during the release of the results on Monday, Safaricom Interim Chief Financial Officer Ilana Darcy observed M-PESA has been the most affected revenue stream posting a 23.5% decline in Average Revenue Per User (ARPU).
The company took a hit from the M-PESA zero-rating taking a negative outlook from different functions including Transfers (Ksh4.5 billion), Payments (Ksh1.6 billion), Betting (Ksh0.7 billion), and Withdrawals (Ksh0.5 billion).
Value of M-PESA transactions however ticked up to Ksh9 trillion from Ksh6.8 trillion reflecting a 33% growth.
As captured in the company’s balance sheet, the telco’s service revenues (M-PESA& Voice) declined to Ksh118 billion down from Ksh124 billion representing a 4.8% downward change.
Mobile data revenue however grew 14.1% to Ksh 22.2 billion from Ksh19.5 billion sustaining the double-digit trend of recovery from the prior year driven by sustained momentum in customer growth and usage.
The company raked in Ksh11 billion in the first quarter of the year and Ksh11.3 billion during the second quarter from mobile data sales.
“The growth in mobile data in the second quarter, more than offset the decline in voice, with data increasing by 1.2 billion shillings in the quarter while voice declined by 0.7 billion shillings,” said Ms Darcy.
Safaricom will not be paying dividends for the period under review opting to be pragmatic instead in light of economic uncertainity.