Safaricom PLC has reported a 10.6 percent decline in profit after tax for the year ended March 2023.
This has been attributed to inflation pressures on customers’ spending and high investment cost in Ethiopia.
Even so, the revenue growth was underpinned by robust growth in M-Pesa and data revenue.
M-Pesa now contributes to 39.7 percent of Safaricom’s revenue and mobile data contributes 18.2 percent.
The telco reported a net earning of Kshs 62.3 billion during the year under review compared to Kshs 67.49 billion in the same period last year.
The firm’s service revenue closed the year at Kshs 297.2 billion (adjusted for mobile termination rates impact), 5.72% up year-on-year. Without adjustment, it is Kshs 295.2 billion.
This is the firm’s third straight drop in a row after it posted a 6.8 percent profit retreat in 2021 to Kshs 68.67 billion, which was the first in nine years.
The board has recommended a final dividend of Kshs 0.62 per share.
Safaricom Plc chief executive officer Peter Ndegwa attributed the drop to harsh economic times that saw customers cut on their voice budget, opting for social media. High investment costs in the Ethiopian market also ate into the profits.
Read: Safaricom’s Plan to Launch M-Pesa Services in Ethiopia Completed
“We have delivered a solid set of results despite the tough operating environment occasioned by a slowdown in business activity in an election year in Kenya, tough macro environment as well as change in mobile termination rates which impacted our voice revenues significantly,” Ndegwa said.
He reassured investors that the business is stable and regained a strong positive momentum in the second half of the year.
Looking into the future, he is optimistic that the business is well positioned to support customers and provide technology solutions as the firm transitions into a purpose-led technology organisation.
Crossing the 50 per cent threshold meant that Safaricom’s market worth exceeded the combined valuation of all the other listed companies.
This raised market concentration concerns given that the top five firms —Safaricom, Equity Group, KCB, EABL and Co-operative Bank —accounted for more than 80 per cent of the NSE’s valuation, while also dominating daily trading volumes.
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