NAIROBI, May 27 – Mobile service provider Safaricom Tuesday announced a profit after tax of Sh13.9 billion for the year ended March 31, 2008, up from Sh12 billion recorded during the same period in 2007.
The company’s revenue increased to Sh61.4 billion up from Sh47.4 billion in 2007, while its market share grew from 73 percent to 84 percent, amid increased competition.
While announcing the results, Chief Executive Officer (CEO) Michael Joseph attributed their success to the localisation of services to the Kenyan public, the increased subscriber base and the tariff war, which has seen call charges reduce significantly, allowing them to make profits from the volumes of calls made.
“The growth in subscribers was also driven by strong marketing efforts and the wide acceptance of low denominated top-up vouchers, as well as low cost handsets offerings,” the CEO observed.
Their subscribers increased by 68 percent from 6.1 million to 10.2 million customers during the same period.
While acknowledging that the entry of two more players into the market in the coming months would intensify the competition, Joseph said they would not relent in their aggressive introduction of products and services to grow their profit margins.
He said part of their outlined plans was to increase their network coverage into the rural areas.
“We are more than ready for the competition,” Joseph said, adding that having a national foot print was their strategy to make sure they stayed ahead of their competitors.
He noted that the expansion into countryside as part of the company’s outlined plans to grow their profit margins as it has the potential of a 10 percent return on investments in the first 10 months.
Joseph underscored that their capital expenditure was likely to remain high over the next few years owing to the expansion of the GSM coverage footprint but Joseph said this would enhance their ability to protect their market share, offer high quality network coverage and capitalise on the high potential of the data market.
The CEO also explained that they had plans to increase the number of clients for their money transfer service M-Pesa to five million before the end of 2008. Currently the mobile operator has 2.6 million customers.
He noted that although the service, which was launched at the beginning of the 2007/2008 financial year was not designed as a profit-making tool, it had been very successful, with over two million transfers exceeding Sh3 billion made in March 2008 alone.
“This service has given many of our unbanked subscribers an efficient and very cost effective way of transferring money around the country,” he boasted.