Safaricom has today released its half-year results for the six months ended 30th September 2019, with its EBIT, or Profit before Interest and Tax, hitting 49.82 billion shillings.
According to Safaricom, there was a 12.7 percent growth in EBIT and a margin of 38.5 percent up 2.4 percentage points Year on Year (YoY). Additionally, the net income for the telco grew by 14.4 percent to 35.65 billion shillings from HY 2018/2019.
“Our top priority for the first half of this year continues to be our customers, specifically regaining their trust and in the process growing our market share. I am pleased to advise that we have witnessed improved customer sentiments through measures such as NPS and brand consideration and a market share increase for the first time since 2017,” said Michael Joseph, Safaricom PLC Interim CEO.
Operating review
Revenue growth for the half year to September 2019 was 5.3 percent driven by robust performance across M-PESA and fixed data and strong customer growth offsetting decline in the traditional revenue streams and soft performance on mobile data.
Voice and messaging
Voice declined 1.4 percent while messaging declined 11.0 percent. This decline was partly driven by competitive pressures and migration to newer technologies, and partly by the impact of corrective actions taken last year to make it easier for our customers to manage their premium rate subscriptions, and opt out of them where no longer needed. Voice and messaging are now 44.6 percent of service revenue.
M-PESA
M-PESA has sustained robust growth in the period recording YoY growth of 18.2 percent despite the impact of the slow-down in the gaming industry.
The growth was driven by a 12.4 percent YoY increase in 30-day active M-PESA customers to 23.61 million and a 7.8 percent YoY growth in monthly usage per customer to 13 chargeable transactions per month.
The company added 2.6 million active M-PESA customers with MPESA now accounting for 33.8 percent of service revenue, further accelerating displacement of traditional voice and messaging services.
Excluding gaming, revenue grew 20.9 percent YoY and chargeable transactions per customer per month grew 17.5 percent.
Mobile Data
Mobile data registered a 4.0 percent growth in revenue as we continue to carry the effect of corrective actions taken in prior year; repositioning data bundles and absorbing the excise duty increase.
Mobile data now accounts for 15.9 percent of service revenue and registered an impressive 14.6 percent growth on the revenue earned in the second half of last year. Growth in mobile data revenue is expected to return to double digits in the second half of this year driven by increased penetration and usage.
Fixed Data
In the period, fixed service revenue registered a growth of 18.4 percent and contributes 3.7 percent of total service revenue in the period.
IFRS 16
IFRS 16 Leases was effective for financial periods beginning on or after January 1 2019 and the Group has adopted it but has not restated comparatives for the 2018 reporting period, as permitted under the specific transitional provisions in the standard.
The reclassifications and the adjustments arising from the new leasing rules are therefore recognized in the opening balance sheet on April 1 2019.
“We are pleased with the strong results we have delivered for first half of FY20 and we remain confident that we shall attain our full year guidance, building on our long track record of consistent delivery, protecting shareholder wealth and putting the customer first” said Safaricom in a statement.
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