Kenya’s Safaricom boosts profit as mobile money fees return

Bloomberg | Safaricom Plc., first-half profit jumped as the company reinstated charges on mobile-money transfers, Chief Executive Officer Peter Ndegwa told investors Wednesday.

Africa’s second-biggest company by market value said net income rose 12 percent to Ksh37.1 billion (US$332 million) in the six months through September. Sales on Safaricom’s money transfer and payments platform, M-Pesa, grew by 46 percent, boosting service revenue to Ksh138.4 billion (US$1.24 billion), Chief Finance Officer Dilip Pal said at a briefing in the capital, Nairobi.

The value of M-Pesa transactions grew 51.5 percent year-on-year, he said.

Kenyan regulators ordered telecommunication companies to waive mobile-payment transfer charges at the start of the coronavirus pandemic to discourage the use of physical cash as part of measures to curb the spread of the virus. The lifting of the ban enables the carrier to get its growth plans back on track, with an expansion into Ethiopia a major priority.

The company expects earnings before interest and taxes in the 2022 financial year to be in the range of Ksh97 billion (US$868 million) to Ksh100 billion (US$895 million), and capital expenditure of Ksh70 billion (US$626 million) to Ksh73 billion (US$653 million), Ndegwa said. The projections are partly based on the expected economic recovery in Kenya and expansion plans in Ethiopia, the CEO said.

Safaricom has mapped out possible risks from implementation of market liberalization to the new regulatory frameworks in Ethiopia, according to Ndegwa. However, “the opportunities outweigh the risks in our view, and the uncertainties, largely because the telco market liberalization has been unquestionably positive,” he said.

The company’s stock rose 1.3 percent at Ksh40.60 (US$0.36) at 10.57 a.m. in Nairobi. The company trades at 21 times its estimated earnings per share for the coming year.