Safaricom is positioned for an earnings step-up in FY2026 as losses in Ethiopia diminish and M-PESA contributes a larger share of group revenue, according to AXYS Group Mauritius.
- •The report highlights steady cash flow in Kenya and continued growth in mobile data as the basis for the improvement.
- •AXYS projects Safaricom’s group EBIT* to rise to KES 144 billion to KES 150 billion in FY2026, reflecting a narrowing of Ethiopia operating losses from KES 61 billion to about KES 23–26 billion.
- •Service revenue in FY2025 grew 11.2% to KES 388.7 billion, supported by 15% growth in M-PESA and 16.5% growth in mobile data. EBITDA increased to KES 172 billion, with an EBITDA margin near 44%.
Safaricom's net margin stands at 18%. The conglomerate maintained a 4–5% dividend yield and a payout ratio near 75%. Return on equity was 30.44% in 2024 while net debt to EBITDA* is 1.2x.
AXYS assigned a BUY rating with a KES 32 target price. The Discounted Cash Flow* valuation range is KES 32–34, indicating 15–18% upside and a total return of about 20% including dividends. The report notes a forward valuation of 12–13x P/E and 6–7x EV/EBITDA.
Network Scale and Fintech Expansion
Safaricom serves over 42 million subscribers in Kenya. The company has 98% 4G population coverage and more than 1,100 5G sites across all 47 counties.
M-PESA contributes over 40% of group revenue. Related services include the Ziidi Money Market Fund (KES 7.4 billion Assets Under Management) and Bima micro-insurance, along with enterprise and home broadband offerings.
In Ethiopia, subscribers exceed 8.8 million, with mobile data accounting for over 70% of local revenue. AXYS identifies Ethiopia as the main long-term growth driver due to population scale and low mobile and internet penetration.
Peer Comparison
Compared to regional peers, Safaricom’s financial metrics highlight its premium valuation and profitability.
| Metric | Safaricom PLC | Vodacom Group | Airtel Africa | Itissalat Al-Maghrib | IHS Holding Ltd | Helios Tower | Telecom Egypt |
|---|---|---|---|---|---|---|---|
| EBITDA Margin | 44.29% | 36.43% | 46.18% | 52.43% | 57.84% | 54.38% | 36.73% |
| Net Margin | 17.96% | 10.90% | 4.44% | 18.31% | 7.29% | 6.64% | 17.85% |
| Return on Equity | 34.55% | 17.96% | 9.47% | 34.69% | — | 151.64% | 26.00% |
| Debt/Equity | 71.33% | 75.01% | 215.57% | — | 2626.83% | 1952.80% | — |
| P/E | 18.69x | 18.69x | 52.77x | 14.81x | 18.18x | 28.26x | 5.07x |
| Price/Book | 6.34x | 3.01x | 4.41x | 4.19x | — | 21.41x | 1.44x |
| Dividend Yield | 4.27% | 4.64% | 2.18% | 4.72% | 0.00% | 0.00% | 3.43% |
AXYS links Safaricom’s higher price-to-book multiple to its higher return on equity relative to Vodacom and Airtel Africa.
Risks
Key risks include regulation affecting M-PESA fees, slower subscriber growth, KES depreciation and inflation impacting operating costs, and new competition in mobile data and digital payments. Satellite broadband introduces a competitor in high-usage data segments.
AXYS concludes that FY2026 marks the beginning of a new earnings phase supported by Kenya cash flow, M-PESA scaling, and Ethiopia moving toward breakeven.
AXYS expects the Ethiopia unit to reach breakeven by FY2027.
*Earnings Before Interest and Taxes: a financial metric that shows a company's profitability from its core operations.
*Earnings Before Interest, Taxes, Depreciation and Amortisation: This metric is used to assess operational profitability by excluding financing and accounting decisions like debt, taxes, and non-cash expenses like depreciation and amortization.
*Discounted Cash Flow: a financial valuation method used to estimate the present value of a future investment based on its expected cash flows.
