What Will Make Telecommunications Company Safaricom Tick In 2023?

By Juma / Published January 20, 2023 | 2:08 pm

KEY POINTS

The value of mobile transactions in the 11 months to November last year hit 7.2 trillion shillings, representing a 15 percent growth compared to the 6.24 trillion shillings recorded in a similar period in 2021 with over 90 percent of it being via M-Pesa.

KEY TAKEAWAYS

Kenyans borrowed an average of 1.6 billion shillings from Fuliza, Safaricom’s M-Pesa overdraft during the first 6 months of 2022.

In 6 months to June 2022, Fuliza disbursed 290 billion shillings up from 220.38 billion shillings disbursed in the same period last year. This means Kenyans were borrowing about 66,666,666 shillings per hour from Fuliza in the past 6 months.

Safaricom is a giant. Let us face it. It is one telecommunications company whose roots are so deep within and without Kenya that we cannot afford to lose or see it going down even with an iota. It is too important to let go.

As the year kicks off, many investors are looking for companies they can invest in, and of course, Safaricom pops up among their top options. Safaricom, being a name that everyone knows and associates with comes with an unwritten trust that only those with a third eye can see.

Soko Directory analyzed and came up with five reasons that will make Safaricom tick this year and a reason enough for those looking to invest to channel their funds. This piece does not inform investor choices but gives reasons as to why we the giant come out as a good option.

According to our analysis, here is what will make Safaricom tick in 2023:

Taxes and Revenue

Safaricom, in the financial year ending March 2022, remitted 124.7 billion shillings in duties, taxes, and license fees to the government. This payment increased the total duties, taxes, and fees paid by Safaricom since its inception to 1.04 trillion shillings. This excludes the dividends that government receives for its 35 percent stake in the telco.

Coming at a time the government of Kenya is pushing every avenue that can net in more taxes and revenues, Safaricom remains the largest taxpayer and revenue earner for the government of Kenya, hence contributing to the trickling-down benefit effect down the value chain.

And with the government seeking to link the Kenya Revenue Authority (KRA) to the M-Pesa systems, the contribution of Safaricom as a whole, plus the more than 30 million M-Pesa users will be momentous and something the government will have to guard with envy.

Related Content: Safaricom Reverses The Bonga Points Expiry Plan

M-Pesa

Between March 2020 and October 2022, active mobile money users have risen by 6.2 million while the monthly volume and value of Person-to-Person transactions increased from 162 million transactions worth 234 billion shillings to 440 million transactions worth 399 billion shillings. This represents an increase of 171 percent and 71 percent respectively.

M-Pesa virtually cuts across the economy and almost all other sectors depend on it. M-Pesa has been quoted as the reason Kenya has been leading in financial inclusion for more than 10 years. The company continues coming up with different interesting features.

Currently, all Kenyan commercial banks have integrated M-Pesa into their systems for customers to deposit funds to their bank accounts and withdraw from their bank accounts to their M-Pesa wallets without visiting branches.

Soko Directory, however, sees the idea of separating M-Pesa from Safaricom so that both can be standalone businesses as not a very good idea.

Fuliza

Fuliza has received both praise and condemnation in equal measure. However, this is one of the products by Safaricom that clicked and hit the table from the moment it was launched and Kenyans have never had enough.

Fuliza is an overdraft by Safaricom’s M-Pesa that gives customers an opportunity to continue with their transactions even when their M-Pesa balance is zero. Initially, it was meant for payment of products and services only.

But now, Fuliza customers can withdraw their Fuliza at an M-Pesa agent just the same way they do for normal M-Pesa transactions. Fuliza, despite other competitors like “Hustler Fund”, will continue making Safaricom tick and big.

Kenyans borrowed an average of 1.6 billion shillings from Fuliza, Safaricom’s M-Pesa overdraft during the first 6 months of 2022.

Share Price and Profits

Safaricom has been often been described as one that makes “crazy profits.” During the release of the April to September financial results, Safaricom announced that its profits after tax dropped from 37 billion shillings to 30.2 billion shillings.

This was a 6.8 billion shillings drop and becomes the lowest profits the telco has reported in a half-year period over the past four years. The drop was however justified following the entry of Safaricom into Ethiopia, another huge investment.

Safaricom’s revenues, however, grew marginally from 146.368 billion shillings in the first half of 2021 to 153.4 billion shillings in the six months to September, a 4.8 percent growth. And this year seems even better.

On share price, although towards the end of the week, the price seemed to fall to a low of 20, this is not the first time the Safaricom share price has always rebounded and nothing has ever kept it down as compared to other players.

Investing in people

Safaricom, through Safaricom Foundation, has been working with its partners to improve the lives of Kenyan communities. The Safaricom Foundation has supported the implementation of projects in a broad range of areas – Economic Empowerment, Education, Environmental Conservation, Health, Water, Arts, Music and Culture, Sports, and Disaster Relief.

The Foundation supported 59 economic empowerment projects, totaling 67 million shillings. These funds went towards supporting organizations and communities to implement projects in income generation, food security, employment creation, and skills transfer through vocational training. The projects ranged from small-scale community initiatives to larger-scale nationwide initiatives.

With the aim of providing quality education to Kenya’s children, the Foundation has constructed and equipped libraries and laboratories in schools. The Foundation invested in infrastructural development and the provision of specialized learning equipment for special schools and schools in extremely marginalized areas. The Foundation supported 60 education projects, totaling 81 million shillings.

The Foundation has also supported the environment, and health among others. This year will not be different.

About Juma

Juma is an enthusiastic journalist who believes that journalism has power to change the world either negatively or positively depending on how one uses it.(020) 528 0222 or Email: info@sokodirectory.com

View other posts by Juma