Safaricom profits skyrocket
By Semaj Itosno, Nairobi, Kenya
Kenya’s largest communications firm, Safaricom, has posted unprecedented sh144.7 gross profit for the year ended March 31, 2014, making it the most profitable company in the region.
This is a 16 per cent increase largely boosted by revenue from its mobile money transfer service, MPESA, SMS and data.
The very popular M-PESA contributed sh26.6bn in revenue which is a 22 per cent increase from the previous financial year.
Pending approval by shareholders, the company would pay out a dividend of Sh 18.83bn, which represents 82 per cent of the net income, the largest dividend in Kenyan history. This means sh0.47 per share – an increase of 52 per cent.
“Voice service revenue grew to Kshs 86.3bn and accounted for 62 per cent of our service revenue (down from 66 per cent in the previous year). This growth was supported by our loyal customer base attracted by a superior network experience, convenient airtime distribution and attractive consumer propositions and promotions such as the ‘Tetemesha’ campaign,” said Safaricm CEO, Bob Collymore.
The company also saw customer base grow by 11 per cent to 21.6 million with SMS revenue growing by 34 per cent to Sh13.6bn, which represented 10 per cent of the company’s revenue.
According to Collymore, this was driven by increased usage from affordable SMS bundles and SMS based promotions such as ‘Bonyeza Ushinde’.
“Direct costs grew at 10 per cent but at a lower rate than the 16 per cent growth in revenue. This in turn resulted in an improvement in the contribution margin to 64 per cent. Our operating costs stood at 22 per cent of total revenue as we continue to explore further cost reduction initiatives focused on transmission costs, network operating costs (including fuel) and IT operational costs,” said Collymore.
“We continue to focus on our ‘Best Network in Kenya’ program with sh27.8bn invested in the network during the year, our goal being to provide the best customer experience through improving our network quality, capacity and coverage. We have increased the population coverage of our 2G and 3G networks, completed network modernization in six key cities and rolled out fibre to 50 per cent of our base stations in Nairobi,” he said.
Mobile data revenue grew by 41 per cent driven by an increased uptake of affordable data bundles and a 34 per cent growth in 30 day active mobile data customers to 9.6m.
The statement shows that 3.1m customers are on 3G enabled devices of whom 1.9m are on smartphones.
Fixed data revenue increased by 22 per cent to sh2.6bn on the back of 4 per cent growth in fixed data customer.
According Communication Commission of Kenya latest statistics, mobile penetration in Kenya currently stands at 76.9 per cent with Safaricom recording the largest subscriber share of 67.9 per cent.
Safaricom is expected to buy out yuMobile assets alongside Airtel but Collymore the deal is yet to be sealed.