The giant telecommunications company, Safaricom Plc half-year profits have dropped by six percent to 33 billion shillings compared to a similar period in 2019 according to results released by CEO Peter Ndegwa.
Safaricom has attributed the drop in profits to the decision by the Central Bank of Kenya to zero-rate M-Pesa transactions for amount 1,000 shillings and below. M-Pesa on a year-to-year declined by 14.5 percent.
A CBK directive compelled mobile money products to zero-rate person to person transfers of under Kes 1000, as well as bank to M-PESA and wallet to bank transfers. Other services that were zero-rated are paybill tolls for government hospitals to avoid handling of cash.
In the first six months of this year, M-Pea brought in 35.9 billion shillings to Safaricom, a drop from 42 billion shillings recorded in 2019. Safaricom CEO Peter Ndegwa says the performance was good given the tough operating environment.
“This has been a tough period for businesses and our customers and we committed ourselves to walk through this journey together. During this period, we took several initiatives to support our customers and the government to pull through this pandemic,” he said.
Safaricom continues to bank on mobile data achieved good performance and still has an opportunity to accelerate further according to Mr. Ndegwa.
Voice declined 6.5 percent on a year-to-year basis as the growth in customers and usage is offset by continued downward movement on the effective rate per minute, while messaging declined 6.9 percent in line with global industry trends.
Voice outgoing minutes grew 10.8 percent on a year-to-year basis driven by “Tunukiwa” the talk more campaign, aimed at customers with low usage enabling them to call at a lower rate in line.
Safaricom is currently celebrating 20 years of being operational in Kenya and has promised Kenyans amazing products and services, including awarding them with a 20-minute free call.