Safaricom Pulls a Major Surprise In Ethiopian Market

Safaricom registered its first revenue from its Ethiopia operations in its first reporting cycle since launch of its commercial operations. Safaricom Ethiopia Service Revenue for the period ended 30th September 2022 was Ksh9.1 million while Total Revenue including handsets sales was Ksh98.3 million.

Safaricom Kenya delivered a solid set of results despite the prevailing macroeconomic challenges leading to a tough operating environment in Kenya and elevated pressure on consumer spending. Meanwhile, Safaricom Kenya net income grew by 0.6% YoY supported by the 4.6% growth in revenue.

“We are pleased with the commercial progress made in Ethiopia since launch of operations early last month. Most importantly we are enthusiastic on the growth opportunity in Ethiopia, with over 740,000 customers so far and 20,000 new customers joining the network daily,” Mr Peter Ndegwa, Safaricom PLC CEO, said. “We are also encouraged by data and voice usage levels with 711 MBs average usage per active data customers and 30 Minutes of Use per active voice customers for the month of October.”

Mr Ndegwa noted that Safaricom had invested over $598 million in Ethiopian operations. The Government of Ethiopia has also committed to award Safaricom a mobile money license which will boost commercial efforts, with a greater focus of driving financial inclusion and digital acceleration for the people of Ethiopia.

Voice service revenue dropped by 3.8% to Ksh39.88 billion; mobile data revenue grew by 11.3% to Ksh26.30 billion, while M-PESA revenue grew by 8.7% to Ksh56.86 Billion.

“Given the impact of the Mobile Termination Rates from Ksh0.99 to Ksh0.58, a slowdown in business operations due to the elections period, increase in excise duty on SIM cards and mobile phones and a failed rain season leading to more economic hardship for the country, Safaricom has done very well to deliver solid revenue growth and a net income that is within the expected range,” said Mr Ndegwa.

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While economic, regulatory and tax headwinds will continue impacting revenue performance, Safaricom anticipates increased usage and customer growth to drive half two momentum.

“The board is pleased with the results delivered for first half of the financial year and remain committed in protecting shareholder wealth, by ensuring management puts our customers first, continuously innovating to offer relevant products, services and solutions to meet their needs. We remain mindful of the sustained consumer wallet pressure with rising inflation, the highest in five years at 9.2% in September 2022 and high commodity prices,” said Mr John Ngumi, Chairman, Safaricom Board of Directors.

Safaricom will soon be launching new products and services in the second half of the financial year, including the M-PESA Go product to enhance child safety and sound financial knowledge to children below 18 years as well as the anticipated return to charging on banking transactions.

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“We have reviewed our value propositions considerably driving more value for the same price points, through effective use of Data and Analytics to advance personalized offerings to customers. For instance, through our customer value management (CVM) tool, our data prices have gone down by 31.7% percent while usage has gone up by 69.8%,” said Mr Ndegwa.

KEY HIGHLIGHTS

• Service Revenue +4.6% to KShs 144.83Bn
• Voice revenue -3.8% to KShs 39.88Bn
• M-PESA revenue +8.7% to KShs 56.86Bn.
• Mobile data revenue +11.3% to KShs 26.30Bn.
• Total customer base +2.9% to 43.17Mn for Kenya, 180k for Safaricom Ethiopia
• One-month active M-PESA customers +8.6% to 31.17Mn.
• One-month active mobile data customers +4.8% to 25.20Mn

Solid financial performance

• Safaricom Kenya Earnings Before Interest and Tax (EBIT), +0.3% to KShs 58.40Bn, +0.8% excluding impact of Mobile Termination Rates (MTR) changes

• Safaricom Plc Group EBIT -11.5% to KShs 51.25Bn and -11.1% excluding impact of MTR changes

Net Income

1. Safaricom Plc Kenya +0.6% to KShs 37.55Bn
2. Safaricom Plc Group excluding minority interest, -10.0% to KShs 33.47Bn

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