Kenyan-based telco Safaricom has posted the first drop in full year profit in nine years weighed down by reduced voice, messaging and M-Pesa revenues on the back of free mobile money transfers of Ksh1,000 ($9) and below.
The telco’s net profit for the financial year ended March 2021 dropped by 6.8 percent to Ksh68.67 billion ($641 million) from Ksh73.65 billion ($687.9 million) the previous year.
“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,” said Peter Ndegwa, Safaricom CEO.
The performance came on the back of a decline in service revenue and increased costs in Covid-19 business environment, plunging the telco into the first full year profit fall since 2012.
Safaricom had in March 2012 posted a 4.03 percent fall in net profit to Ksh12.63 billion ($117.9 million) but has since been recording growth until the infectious virus upset the business environment.
During the review period, voice revenue fell by 4.6 percent to Ksh82.55 billion ($771 million) while messaging revenue retreated by 11.7 percent to Ksh13.6 billion ($127 million).
M-Pesa revenue, which accounted for about a third of the total revenue, declined by 2.1 percent or Ksh1.79 billion ($16.7 million) on the back of zero-rating transfers of Ksh1,000 ($9) and below from mid-March to December last year.
Free transfers had seen M-Pesa revenue decline 14.5 percent in half year but recovered to grow at 10.1 percent in the second half of the year following the lapse of zero charges.
While total revenue grew by 0.6 percent to Ksh264.02 billion ($2.5 billion), helped by growth in mobile data, fixed service and wholesale transit, increased costs piled pressure on the bottom-line.
Direct costs rose by 7.1 percent or Ksh5.3 billion ($49.5 million) to Ksh80.15 billion ($784.7 million) while the expected credit losses—an estimate of the outstanding payments that it does not expect to recover— rose 1.8 times to Ksh3 billion ($28 million).
Safaricom board has recommended a final dividend of Ksh0.92 per share amounting to Ksh36.86 billion ($344.3 million), bringing the total payout for the year to Ksh54.89 billion ($512.7 million).
The telco had paid an interim dividend of Ksh0.45 per ordinary share amounting to Ksh18.03 billion ($168.4 million).
The current year’s total payout is a slight drop from last year when shareholders received Ksh56.09 billion ($523.9 million).