Safaricom plans to launch a device financing scheme to provide customers with 4G devices. This scheme is expected to drive up data consumption among its customers and consequently increase the firm’s revenues.
Safaricom plans to unveil the device financing scheme at a time when the company is experiencing intense pressure on earnings due to the waiver of Mpesa transfer fees, the general economic slowdown and reduced spending by mobile phone users. Additionally, the company has limited room to cut expenses given the short term nature of the current crisis.
The outgoing CFO Sateesh Kamath described the current situation as “wash-out year.”
Nonetheless, on the bright side, Safaricom has registered remarkable growth in data revenue. The telco noted that “there is a trend for substitution of voice by data.” The company projects 21% year on year data revenue growth in the current financial year, just like in the second half of last year.
During an investor briefing on Thursday, Safaricom’s management noted the rising demand for Fixed Wireless Access by SMEs switching from FTTB (Fiber to the Building) as well as increased use of residential fixed internet due to the shift to working from home.
Mobile money withdraws have dropped, a factor attributed to the uncertainty brought by the current pandemic. The company said that overall transactions were down in April and May but started to pick up in June.
Future Growth
Safaricom sees a great growth opportunity in the business to business money transfer segment. The company recently upgraded the Lipa na Mpesa platform for businesses enabling merchants to do more with the wallet, including payments to suppliers, micro-financing, as well as data analytics.
The telecommunication giant is also working on a Wealth Management product referred to as Mali. Mali will be offered by Safaricom in partnership with a licensed wealth management service provider.
Safaricom is also waiting for a license to operate in Ethiopia. However, the current license does not include mobile money services. The company expects the licensing process to be finalized by the end of 2020 or in early 2021.
Citi analysts give a buy recommendation on Safaricom with their target price set at KSh 33.1.
See also;
Safaricom Picks Ilanna Darcy as New CFO
Safaricom to stir local market activity as it closes books, holds virtual AGM
Cash-rich Safaricom well placed to weather Pandemic
Safaricom Among the Final 12 Firms Bidding for Ethiopia’s Telecom License
