Connecting Africa is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 3099067.

4G/5G

Safaricom Reports Strong Growth in Fiscal First Half

Article Image
Safaricom has continued to grow its business at a fast pace during the first six months of its current financial year (to the end of September), with the Kenyan operator reporting growth in customer numbers, revenues, margins, traffic and network coverage.

The operator added 450,000 new customers, compared with a year earlier, to take its total to 29.94 million, of which more than 25 million were active users (using a service within the past month). Monthly average revenue per customer (ARPU) increased by 5.4% to KES 662.51 (US$6.53).

Kenya's market leader reported a 7.4% year-on-year increase in total revenues to 122.84 billion Kenyan shillings ($1.21 billion) for the six-month period ending September 30, 2018. As the table below shows, mobile data revenues grew by 10.8% and income from the use of its mobile finance service M-PESA grew by 18.2%.

Its earnings before interest and tax (EBIT) grew by almost 19% to KES44.6 billion ($439 million), while net income was up by more than 20% to KES31.5 billion ($310 million).

The operator has continued to invest in its mobile network coverage, boosting its number of 4G basestations by 62% to 2,353 -- the operator says it now boasts 53% 4G service coverage -- and its 3G basestations by 21% to 4,737. CEO Bob Collymore noted that Safaricom had invested KES17 billion ($167 million) during the six-month period "driven by increased network roll out and acceleration of broadband and fiber deployment."

Table 1: Safaricom Fiscal 2019 H1 Key Numbers

KES billions IAS 18 HY 19 IAS 18 HY 18 IAS 18 change %
Voice revenue 48.03 47.35 1.40%
M-PESA revenue 35.52 30.05 18.20%
Messaging revenue 8.81 8.92 -1.20%
Mobile data revenue 19.45 17.55 10.80%
Fixed service revenue 3.91 3.23 21.00%
Other service revenue 2.49 2.63 -5.30%
Service Revenue 118.21 109.73 7.70%
Handset revenue and other revenue 4.33 4.49 -3.50%
Construction revenue 0.3 0.2 48.70%
Total Revenue 122.84 114.43 7.40%
Operating costs -25.82 -24.13 7.00%
EBITDA 62.12 54.27 14.50%
EBITDA margin %* 50.60% 47.40% 3.2ppt
Depreciation & amortization -17.56 -16.74 4.90%
EBIT 44.56 37.53 18.70%
EBIT Margin %* 36.30% 32.80% 3.5ppt
Net Income 31.5 26.2 20.20%
Net Income %* 25.70% 22.90% 2.8ppt
Earnings per share 0.79 0.65 20.20%
*All margins are calculated on total revenue (excluding construction revenue) plus other income

The numbers impressed investors, as Safaricom's share price gained more than 4.2% on the Nairobi exchange Friday morning to KES24.50. But there are concerns for the company and its investors on the horizon, as a report from Reuters noted that new tax pressures were expected to impact on the company's earnings.

Collymore and his team are doing what they can to offset the new tax burden, including a shift in its operational processes. "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 characterized 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," said the CEO.

Safaricom CEO, Bob Collymore speaks during the Safaricom half year results announcement at Michael Joseph Center.
Safaricom CEO, Bob Collymore speaks during the Safaricom half year results announcement at Michael Joseph Center.

In its review of its fiscal first-half performance, the operator focused on three key areas of growth -- M-PESA, mobile data and fixed line services, which together "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." It added: "Mobile data and fixed data contributed 30% of total service revenue growth."

The operator seems particularly bullish about its investments in fiber-to-the-home (FTTH) broadband. "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," the operator noted in its earnings release.

— Ray Le Maistre, Editor-in-Chief, Light Reading for Connecting Africa.

Innovation hub

Story

Omdia View: February 2024

Highlights in February 2024 in the Middle East and Africa included 5G launches in Senegal and 5G trials in Egypt as well as Kenya's first 5G MVNO. Airtel also launched a new wholesale connectivity business while MTN and Huawei are planning a joint Innovation Technology Lab in South Africa – that and more in this month's Omdia View.

Story

Key adoption areas for machine learning in Africa

ICT analyst Francis Hook identifies some of the key sectors that could be positively impacted by machine learning, including education, government services, healthcare and climate tech.

More Innovation hub

Latest video

More videos

Partner perspectives

All Partner Perspectives

Sponsored video

More videos

Industry announcements

More Industry announcements

Upcoming events

Africa Tech Festival 2024
November 11-14, 2024
Cape Town, South Africa
More Upcoming events

Africa Tech Perspectives

Story

Uber's Marjorie Saint-Lot on inclusion and sustainability in Africa

Uber's Country Manager for Ghana and Cote d'Ivoire, Marjorie Saint-Lot, shares how the ride-hailing company is approaching public-private partnerships, environmentally friendly initiatives and gender inclusion in Africa.

Story

The 100 most influential African leaders in 2023

A new report from Africa Tech Festival and Connecting Africa puts a spotlight on the top 100 African leaders in the telecoms and technology sector in 2023.

Story

Deep dive into East Africa's tech startup ecosystem

New survey reveals a lack of access to investors, reliance on international VCs and global recession trends as the biggest barriers for East African tech startups to access funds.

More Africa Tech perspectives

Guest Perspectives

Story

Omdia View: February 2024

By Omdia Analysts

Highlights in February 2024 in the Middle East and Africa included 5G launches in Senegal and 5G trials in Egypt as well as Kenya's first 5G MVNO. Airtel also launched a new wholesale connectivity business while MTN and Huawei are planning a joint Innovation Technology Lab in South Africa – that and more in this month's Omdia View.

Story

Omdia View: January 2024

By Omdia Analysts

Highlights in January 2024 in the Middle East and Africa included a $200 million fintech deal between MTN and Mastercard as well as 5G network trials by Telecom Egypt – that and more in this month's Omdia View.

More Guest Perspectives

Like us on Facebook

Newsletter Sign Up


Sign Up
Tag id test-002