Kenya’s leading communications company Safaricom has released its audited results for the period ended 30th September 2018.

The Ksh31.5 Billion Net Profit in their Audited Results for the period ended 30 September 2018.

The impressive results were attributed to M-Pesa and revenue growth which recorded a rise of 18.2% and 10.8% respectively.


Full-Year Guidance Maintained

Service revenue growth of 7.7% to KES 118.21bn.
Voice service (incoming and outgoing) revenue grew by 1.4% to KES 48.03bn.
M-PESA revenue growth of 18.2% to KES 35.52bn.
Mobile data revenue increased by 10.8% to KES 19.45bn.
Messaging revenue declined by 1.2% to KES 8.81bn.
Fixed service revenue increased by 21.0% to KES 3.91bn.
Customer numbers increased by 1.5% to 29.94m.
30-day active M-PESA customer growth of 8.8% to 21.01m.
30-day active mobile data customer growth of 3.8% to 17.59m.

Strong financial performance

18.7% growth in EBIT to KES 44.56bn with an EBIT margin of 36.3%, up 3.5ppts YoY.
Net Income increased by 20.2% to KES 31.50bn.
Free Cash Flow up 18.8% to KES 38.508bn.

Speaking during the Safaricom half-year results announcement at Michael Joseph Center, CEO Bob Collymore expressed his pleasure in the progress the company had made in the first half of the year.

“I’m pleased with the progress we made on a number of fronts in the first half of the year. We achieved solid results driven by strong M-PESA gains, further diversification of our revenue mix to tap into new growth areas and investment in new revenue streams, which contributed to a double digit increase in Earnings Per Share (EPS), and free cash flow.

We accomplished all this while sustaining investment in our network, which saw us invest KES 17 billion in the first half of the year driven by increased network roll out and acceleration of broadband and fibre deployment.
As part of our 18th anniversary celebrations we unveiled a new brand campaign aimed at reinforcing our commitment to customers.  The campaign, dubbed “Nawe Kila Wakati”, is expected to deepen customer engagement by giving access to more affordable voice, data and messaging services.

In so doing, Safaricom hopes to endear itself to Kenyans as an enabler, a brand that allows customers to communicate, socialize and do business in line with our strategy of putting the customer first and delivering relevant products and services. 

To deliver on this strategy and ensure that Safaricom is fit for the future, we have embraced the agile way of working. This approach is helping us enhance efficiencies and innovate faster in order to meet rapidly changing customer needs.

The agile approach is also enabling our business to adapt to a dynamic operating environment, which is at the moment characterised by increased taxation, increased competition and continued uncertainty in the regulatory space, therefore allowing us to identify sustainable growth opportunities and maintain our full-year guidance.

Guided by our brand purpose of Transforming Lives, we have continued to strengthen our support for community projects and invest in shared value propositions with the potential to resolve some of Kenya’s most pressing challenges.

We are leveraging the power of mobile technology to develop, take to market and scale propositions in health, agriculture and education, impacting livelihoods positively through products such as: M-TIBA (the mobile health wallet), DigiFarm (our mobile-based agri-business solution) and Shupavu291, a learning tool that is giving millions of young learners in Kenya access to curriculum-approved educational content via the mobile phone.

We also recently officially opened the M-PESA Foundation Academy, which is moulding close to 500 bright young children from disadvantaged backgrounds into future leaders.

Looking ahead, Safaricom is well positioned to sustain growth through continued investment in priority areas such as our E-Commerce platform, Masoko, regional expansion of M-PESA, Digifarm and Home and Enterprise solutions”. Bob Collymore commented

Operating review

1.Strategic progress
We continue to invest heavily in our network, enhancing our quality and coverage, with 4G now extending to 53%, up 21ppts YoY. We continue to leverage the power of mobile technology and diversify our sales mix with M-PESA now accounting for 30% of total service revenue, up 3ppts YoY, and are excited about the future prospects of portfolio expansion and diversification.

2.Voice and messaging
Although shrinking as a portion of total revenue voice and messaging services remain significant to our business, and continues to defy global trends to report a blended growth of 1.0% YoY. This growth has been supported by a data-driven, insights-led approach to customer segmentation, which has allowed us to deliver personalised promotions and identify new market trends.

M-PESA, Mobile Data and Fixed Services
These three growth drivers contributed 95% of total service revenue growth. During the first six months of the year, M-PESA was the main driver of growth, contributing 64% of service revenue growth, further accelerating displacement of traditional voice and messaging services.
Mobile data and fixed data contributed 30% of total service revenue growth.

We are encouraged by the significant commercial recovery that has taken place within M-PESA, growing at 18.2% YoY. While growth in withdrawal revenue continues to slow down, we can see an acceleration in growth of both P2P and new business, with new business now accounting for 27% of total M-PESA revenue.

4.Mobile Data

Growth in mobile data revenue eased to 10.8% in the period. Despite the softer revenue growth recorded, we are encouraged by the strong increase in usage, with average usage per subscriber growing 67% YoY to 640MBs. This growth reflects the success of our more-for-more plans and personalised offers as we continue to push a worry free experience for our customers.

5.Fixed Data
We maintained great momentum in our fixed service business, connecting an additional 30k homes in H1 and more than doubling our coverage YoY.

Though a relatively new line of business, fixed data now contributes 3.3% to total service revenue and grew at 21% YoY in the period.

Summary and outlook

We are pleased with the strong results for the first half of this year and remain confident that we will meet our full year guidance, building on our long track record of consistent delivery, protecting shareholder wealth and putting the customer first.

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