Home Business Safaricom Tremendous Increase in Revenue as it Announces Its Half Year Results

Safaricom Tremendous Increase in Revenue as it Announces Its Half Year Results

by Laura Wambi Arina

L-R, John Tombleson (Chief Financial Officer), Bob Collymore (CEO - Safa...

Safaricom Limited yesterday announced its un-audited results for half of its financial year period ended 30th of September 2015. Despite the current financial problems the country is facing, like the depreciation of the shilling, dynamic competition from other network providers and an increase in interest rates, Safaricom has reported a total revenue amount of Kshs 97.22 billion up from 79.34 Billion in 2014. It has also reported net income of Kshs 18.08 Billion, a 22.91% increase from the Kshs 14.71 billion that was reported in 2014.

Speaking at the announcement Bob Collymore, CEO of the company said, “We continue to grow because we deliver our strategy by putting our customers first, providing relevant products and by enhancing excellence in our operations. We continue to focus on improving our network quality by increasing coverage and capacity to ensure excellent performance and superior customer experience.”

The company has experienced an overall growth of 15% in its customer base to about 3.25 million customers. Bob Collymore attributes this growth to increase of young people getting into adulthood and getting lines of their own, Safaricom expanding internationally and providing a broad range of affordable smart phones like Wiko. It continues to do investments and innovation, currently rolled out 833 3G sites, 236 2G sites and 379 4G sites, with 2328 kilometers of fibre reaching 10 towns, with about 1002 buildings, 6047 homes and 1842 customers connected to it.

Safaricom, which celebrates its 15th birthday this month, contributes to society 9 times the amount of its net income, about Kshs 315bn to the Kenyan economy which accounts for 6% of the country’s GDP. It pays an amount of Kshs 127 billion as tax, both direct and indirect.As it stands, the social value of M-PESA is 4 times the fees paid to Safaricom from the transactions.

Is Safaricom shaken by competition from other network providers?
“We encourage competition because it keeps us alert and innovative, as long as it is within internationally known and approved best practice. However I feel that the government cannot manage competition, it can only regulate how the market operates. Market forces are at a better position to manage competition,” responded Nicholas Ng’ang’a, Chairman of the Board of Directors at Safaricom.

Does Safaricom have a fall back plan in the event that they stop being the number one provider?
Bob Collymore answers this in one sentence,” Dominance is not a crime. We Do not need a fall back plan.”

Strategic priorities for the company
“A marathon is not just 21km. we are paid to go the entire way,” said Mr. Collymore as he laid out the future plans for the company. It intends to;
• Complete deployment and installation of 2G,3G, 4G Wimax and fire connectivity.
• Being the partner of choice for business through the revised SME operating model.
• To continue to support innovations like the recently launched M-Akiba, and to be part of start-up partnerships-Uber Cash and Waze.

Here is a detailed summary of the results.
1. Growth in mobile data
• 40.9% growth in mobile data revenue to Kshs 9.2bn
• Voice service revenue growth by 3.5% to Kshs 45.2bn
• Messaging revenue grew by 11.3% to Kshs 8bn
• Fixed service revenue growth of 24.9% to Kshs 1.9bn

2. Great increase in customer base-Recruiting, retaining and rewarding customers
• 14.9% increase in total customer base to 25.1 million
• 25% increase in 30 day active mobile data customers to 13.1 million.
• 22.7% increase in 30 day active M-PESA customers to 15.7 million.

3.Deepened financial inclusion

• Current M-PESA penetration is at 88% of the total customer base

• Lipa na M-PESA merchants are 36,400 in number who received payments worth Kshs 15bn for goods and services in September.

• Growth in M-Shwari and KCB M-pesa savings.

• M-PESA revenue increased by 24.1% to Kshs 19.4bn

4. Strong financial performance
• A service revenue growth of 12.3% to Kshs 84.9bn

• Non-voice service revenue (Mobile data, Mpesa, SMS, Okoa Jahazi) increased by +24% to 39.7bn

• Net income increased by 23% to 18.1bn

• Free cashflow decreased by about 38% to 9.5bn

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