Safaricom earnings increase 39 per cent to hit Sh17 billion

Safaricom on Tuesday reported a Sh17.5 billion in after tax profit making it the most profitable listed company in the region.

The mobile firm made most of its money from the high usage of data, short text messages and Internet, to drive the profit for 12 months through to March 31, 2013 up 39 per cent against Sh12.63 billion reported over the same period last year.

“The medium to long term outlook remains positive backed by sustained strong growth in data and the expected cost containment,” a note to investors by Old Mutual Investment group read.

Diversified revenue sources

Revenue increased by 16 per cent to Sh124.3 billion, more than half the amount allocated to county government in next year’s national budget.

Voice service contributed Sh77.6 billion, representing 62.4 per cent of the total revenue. This was due to a 33 per cent increase in tariff last year.

“Most notable was our growth in non-voice service revenue with a 29 per cent increase in the year, underpinning our strategy to diversify our revenue channels,” chief executive Bob Collymore told a gathering of investors at the company’s headquarters on Tuesday.

By close of trading on Tuesday, the share price gained three per cent to Sh7.10 with most analysts saying the earnings were within market expectation, but for the dividend which went up 41 per cent to 31 cents per share.

M-Pesa, the mobile money platform, contributed about 17 per cent of the total revenues netting Sh21.8 billion, up from the Sh16.8 billion posted in 2012.

However, analysts have projected a decline in M-Pesa revenues going forward following the passing of the new money laundering regulations prepared by the Central Bank.

“We expect the Central Bank of Kenya to pass the regulations on Money Laundering into law and this may lead to a slowdown in M-Pesa revenue growth,” said Sterling Capital Limited in a research note dispatched on Monday.

The introduction of a 10 per cent tax on all financial transaction by the government is also likely to impact on the growth of M-Pesa.

“We strongly feel that the new tax goes against the goal of M-Pesa to deepen financial inclusion across the country. We have appealed to the government to review the decision to avoid hampering the growth of a service that has become a part of Kenyans’ lives,” Mr Collymore said.

Uptake of mobile data services went up on the backdrop of increased availability of affordable data-enabled devices.

Revenues from the mobile data services jumped 21 per cent to reach Sh6.3 billion.

The company intends to concentrate on network modernisation to improve reliability.