Safaricom profit drops third year in a row, Ethiopia grants M-Pesa licence
Safaricom has announced a 22.2 per cent decline in its profit after tax for the year ended March 2023, the third consecutive year the telecommunications firm has reported a decline in its net earnings. In the period under review, profit after tax closed at Sh52.48 billion, down from Sh67.49 billion in the period ended March 2022.
Safaricom’s numbers took a hit from its heavy capital expenditure expansion in its roll out in Ethiopia, a subsidiary the parent company says is projected to break-even by year four of operations.
In the year ended March 2023, the Ethiopia subsidiary reported a loss after tax of Sh21.7 billion even as the Kenya posted continued to post profitability at Sh74.5 billion buoyed by strong growth in mobile data and mobile money. This morning, Safaricom has been granted a license by the National Bank of Ethiopia to roll out mobile money service in Ethiopia.
Revenue from M-Pesa grew by 8.8 per cent to Sh117.2 billion whilst revenue from mobile data grew by 10.7 per cent to Sh53.6 billion, the first time that revenue from mobile data has crossed the Sh50.0 billion mark.
Safaricom has indicated that it is in the final stages of discussions with the World Bank’s commercial arm, the International Finance Corpotration, for funding towards the Ethiopia subsidiary.
M-Pesa licence in Ethiopia
Meanwhile, Ethiopia has granted Safaricom a licence to launch M-Pesa in the populous nation that is largely unbanked. The telco expects to roll out the mobile money services before the end of the year, which is set to lift the profile of service since its launch in Kenya in 2007.
“As of this morning, Safaricom Ethiopia has officially been granted the licence to operate mobile money. We look forward to launching M-Pesa in the coming weeks,” chief executive officer Peter Ndegwa said Thursday morning during an investor briefing.
The Safaricom-led consortium in Ethiopia has paid $150 million (Sh18.9 billion) as licence fees to the National Bank of Ethiopia (NBE).
The banking sector regulator said Thursday it issued the mobile money service permit to Safaricom M-Pesa Mobile Financial Service, a new subsidiary that is the first foreign-owned unit to be granted the licence.
“We welcome this shift to the use of digital financial services so as to bring greater efficiency, safety, and transparency to the country's rapidly growing financial system,” NBE said in a statement Thursday.
Safaricom Ethiopia grew its customer numbers to three million users seven months after its entry into the country.
Mr Ndegwa said voice, messaging and data services had been rolled out in 22 cities and regions with 1,272 network sites.
It has so far employed 909 staff. BY DAILY NATION
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