Safaricom will be releasing its full-year financial results this morning for the period ending 31 March 2020. A key highlight will be the growth in revenues and growth in the Mpesa brand in 2019. Further, this will be the first public appearance of the new Safaricom CEO Peter Ndegwa who took over earlier this month.
The chairman, Nicholas Ng’ang’a, thanks the management team and interim CEO Michael Joseph for ensuring a smooth transition since the demise of CEO Bob Collymore. In addition, Ng’ang’a says that the telco is trying to find stability in a shifting landscape marred by global health emergency that threatens to disrupt the supply chain. For instance, COVID19 has led to low consumer purchases and high production costs. Safaricom’s total value of the contribution towards fighting COVID19 currently stands at Ksh6.5 billion. Further, the chairman reveals that Safaricom has remitted Ksh111 billion to the exchequer in terms of duties, taxes, and license fees.
The outgoing CEO, Michael Joseph says that during his second stint at the firm he utilized a customer-centric approach to regain market trust, love, and share. The FY19/20 performance reflects the strategic shift with steady revenue growth and double-digit growth in mobile data. For instance, the no expiry data and voice packages have been an instant hit with customers due to affordability and improved customer experience. This has grown market share, regained customers, and led to an increase in data revenues.
Outgoing CEO says they in the final stages of launching wealth management product Mali driving a savings culture. There are talks around the expansion of MPESA GLOBAL where Safaricom is looking to implement more use cases for the Mpesa product. For instance, Michael notes that there is a new marketplace App in development that will aid in enhancing MPESA as a lifestyle platform. One key development was the acquisition of the MPESA brand through a joint venture with Vodacom to enable expansion into African markets such as entry into Ethiopia. During the year, there was accelerated cloud adoption through a partnership with Amazon Web Services. Safaricom sustained 1 million direct and indirect jobs in the year under review.
EARNINGS
Sateesh Kamath -Chief Finance Officer takes us through the impressive financial results largely driven by growth in mpesa and mobile data usage. Service revenue grew 4.8% YoY to Ksh251.2 billion from Ksh239.8B recorded last year. This was despite the firm offering free person to person transfers on Mpesa in the wake of COVID19 and banning of betting firms in Kenya last year. Earnings Before Interest and Taxes (EBIT) rose 13.5% YoY to ksh101Bn from ksh89B reported in FY019 while Headline Earnings per Share(HEPS) grew 14.3% YoY to Ksh1.78 up from Ksh1.56 in FY019. Safaricom reported a 11.4% YoY growth in PROFIT after-tax to Ksh73.66B up from Ksh62.49 recorded last year.
MPESA contributed 33.6% of the service revenue. In this case, MPESA revenues grew by Ksh11B to Ksh84.44B translating into 17.2% YoY growth with betting revenues declining by Ksh1.9B. COVID19 relief measures such as free person to person transfer have cost Safaricom ksh650million in March 2020.
Voice outgoing accounting for 34.5% to Ksh94.45B.
Mobile Data raked in 16.2% of the service revenues growth 12.1% YoY (Ksh4.4B) to Ksh40.6B in FY020. Average MBs per active user grew 47% YoY with Average Revenue Per Active User (ARPU) growing 5% YoY.
