Safaricom breaks profits record, makes Sh20.9bn

Listed communications firm Safaricom Limited has posted a 37 per cent increase it s profits before tax for the period ended March 31, 2010.

The firm recorded Sh20.9 billion compared to Sh15.3 billion it posted in the previous year, once again bringing into focus its profits margin.

Over the past month, the public discourse has been centered along the firms’ performance, which had been a subject of new industry regulations.

According to chief executive officer Mr Michael Joseph, the results were a reflection of the heavy investments that they put in to develop their network.

“This is a capital intensive industry and one must be prepared to invest just as much to realise good results,” Mr Joseph told reporters and investors at a briefing at the company’s headquarters in Nairobi.

It is this investment that the company has blamed their competitors of not willing to put in and relying on the Communication Commission of Kenya to reign in on it as a dominant player.

During the 12-month period, the company revenue grew by 19.1 per cent to Sh83.9 billion from a previous Sh70.4 billion.

The subscriber base also grew by 18.2 per cent to 15.79 million active numbers, still keeping it ahead of competition in the industry.

The data segment of the business realised significant increase in revenue rising to about 24.5 per cent of its total revenue.

As a result of this, M-PESA and Broadband data revenues increased by 137.6 per cent as part of Safaricom’s’ strategy to reduce their dependency on voice revenues.

“There is still a strong demand for data and we are going to do more since the penetration is still low in the segment,” explained Mr Joseph.

During the year, the company netted Sh5.1 billion from text message, Sh7.5 billion from M-PESA and Sh2.9 billion from mobile and fixed Broadband data.

On the other hand, it managed to reap Sh63.4 billion from voice reflecting only a 7.8 per cent growth.

While the voice revenues increased due to a higher subscribers number, the average revenue per user declined from a previous Sh7.3 to Sh6.

In terms of operations, the firms total expenses increased by 11.5 per cent largely attributed to marketing and publicity, payroll and personnel costs as well as an increase in commissions paid to M-PESA dealers.