Connect with us

Hi, what are you looking for?

Capital Business
Capital Business

Kenya

Safaricom rides tough times to post Sh18b profit

NAIROBI, Kenya May 18 – Telecommunications operator Safaricom braved stiff competition and a stringent regulatory environment as it announced profit before tax of Sh18.4 billion in its 2010/2011 financial year.

The figure however marked a 12.4percent dip in profitability from the Sh20.8 billion posted in the corresponding period of 2009/2010.

Net profit stood at 13.1billion down from 15.1billion, signalling a decline of 13 percent.

As had been anticipated, profitability was eroded mostly by static growth in voice revenues, which stood at Sh63.5 billion.

Read statement of results

Safaricom CEO Bob Collymore however said a strategy to diversify away from voice helped keep the operator profitable.

"Our strategy of diversifying away from the voice has delivered very strong growth in the non-voice revenues driven by a significant growth in the number of data and M-PESA customers coupled with customers focused offerings," Mr Collymore told investors on Wednesday.

The Communications Communication of Kenya in August halved interconnect rates triggering a vicious price war between operators.
Mr Collymore said increased regulation in the sector had made the operating environment competitive, but was glad at the resilience shown by the company to grow.

"Revenue growth was faster than customer growth which indicates that it\’s not all about price," he said.

Total revenue grew 13 percent to Sh94.8 billion up from Sh83.96 posted the previous year. Voice revenue, which accounts for 67 percent of total sales, declined 1.7 percent while data revenue grew by 80 percent to Sh5.37 billion. Earnings from SMS climbed 45 percent to 7.54 billion shillings.

Advertisement. Scroll to continue reading.

Safaricom\’s money transfer service M-PESA continued to show growth with customer numbers growing by 14 percent to 14 million subscribers. Total revenues through M-PESA rose by 56 percent to Sh11.8 billion, contributing 13 percent of total revenues.

"The overall contribution of total data revenue increased to 28 percent from 19.6 percent which is in line with our strategy to diversify our products, services and related revenue, the Safaricom chief said.

Despite the ongoing Mobile Number Portability, the operator was able to grow its customer base by 8.8 percent to 17.2 million customers.

"This growth further cements our belief that mobile number portability will have no impact on our revenues in future," he said.

Earlier in the year, Safaricom unveiled its new structure know as Safaricom 2.0 intended to support its new strategy that is more customer focused.

The new structure led to the introduction of three key revenue streams Consumer Business department, Financial services Department and the Enterprise Business department to drive the operator\’s growth.

Mr Collymore said that with the new structure in place, Safaricom would segment its customers with the aim of delivering better services to the consumer.

"We want to become more intimate with the customer to better understand their needs and be able to satisfy what they are looking for," he said.

Safaricom directors have proposed a dividend payment of Sh0.20 per share with the firm expected to spend 60 percent of its income in paying dividends.

Advertisement. Scroll to continue reading.

Follow the author at https://twitter.com/MjKaranja

http://www.youtube.com/watch?v=btIAnmUum5M

Click to comment
Advertisement

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...

Headlines

NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...

Kenya

NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...

Coronavirus

NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...

Coronavirus

NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...