Covid-19 Dips Safaricom Profits By 6.8% To 68.7 Billion Shillings

The Covid-19 pandemic that led to Safaricom zero-rating the transaction of the cash up to 1,000 between March and December 2020 has hit hard on the telecommunications profits with a 6.8 percent drop to 68.7 billion shillings.

The COVID-19 pandemic brought about socio-economic challenges that disrupted our customers strained the consumer wallet and businesses across the country. We were not spared either. The unpredictable times affected our business operations resulting in subdued financial performance,” said Peter Ndegwa, Safaricom CEO.

Profits after tax in the 2019 financial year stood at 73.7 billion shillings. Profits before tax for the 2020 financial year stood at 93.6 billion shillings, a drop from 105.8 billion shillings in the year 2019.

Service revenue for Safaricom declined 0.3 percent YoY in FY21, with a 4.0 percent growth in 2H FY21 and a decline of 4.8 percent YoY in 1H FY21.

Read More: Kenyans Transacted Ksh 4.4 Trillion For Free On M-Pesa To December

Recovery in 2H for the telco was driven by the return to charging on zero-rated M-PESA transactions in Q4, double-digit growth in mobile data, fixed data growth alongside growth in customers and usage.

In the year, one-month active customers grew 9.9 percent YoY to 31.45 million adding 2.8 million customers to the base.

“Our operational efficiencies contributed to relatively stable margins in the year, yielding cost savings
from improved asset utilization and cost efficiencies,” added Mr. Ndegwa.

A total of 1.7 billion free transactions were done via M-Pesa between March and December 2020 with the transactions worth 4.4 trillion shillings.

“Safaricom customers made over 1.7 billion free transactions of KSh. 4.4 trillion between April and December 2020,” said Safaricom CEO Mr. Peter Ndegwa.

During the advent of Covid-19, the Central Bank of Kenya ordered mobile money platforms to zero-rate cash transactions of up to 1,000 shillings.

“The zero-rating of M-Pesa impacted on our profits as you will see in the results. However, we are happy that we took part in empowering Kenyans when they were facing a pandemic,” said Mr. Dilip Pal, Safaricom’s Chief Financial Officer.