Kenya’s largest telco, Safaricom, just announced its half-year financial report for the period ended 30th September 2020. The company’s half-year profit fell for the first time since 2012. Net profit fell by 6 per cent to KES 33.07 billion from KES 35.2 billion in the same period in 2019.
The telco attributed the profit to the free cash transfer orders in place since March by the CBK to help Kenyans stay afloat during the pandemic. M-PESA revenue dropped massively by 14.5% to KES 35.9bn as a result. Last year the company made KES 42bn from M-PESA.
“The free cash transfers have weighed hard on our half-year results. M-Pesa revenues now account for 30 per cent of total revenues in comparison to 33 per cent last year,” said Safaricom Acting Chief Finance Officer Ilanna Darcy.
The company’s significant revenue boost came from the mobile data category, which recorded a 14.1% rise in revenue to KES 22.23bn. Revenue from calls made by customers decreased by 6.5% to KES 40.19bn. Messaging revenue also declined by 6.9% to KES 7.19bn.
Cumulatively, Safaricom’s revenue from the services category narrowed from Ksh.124.3 billion last year to KES 118.41bn, a 4.8% drop.
“Our business has proved to be resilient despite tough operating conditions. There is no doubt that COVID-19 has dealt a huge blow to many people not just in Kenya, but across the globe,” said Safaricom Chief Executive Officer Peter Ndegwa.
“This has been a tough period for businesses—small and large alike—and our customers. We are committed to walk through this journey together,” he added.
On free cash transfers below Ksh 1000, Ndegwa says, “We are not ready at this stage to announce when the free cash transfers end as we are still in engagements with the CBK.” The company previously wanted the CBK to limit free cash transfers below Ksh 1000 to 5 per day to minimize losses.
In its half-year financial results announcement, the company estimates to have lost Ksh 6.1bn over free cash transfers. Free cash transfers are slated to end on December 31st unless the CBK renews its directive.