Safaricom PLC’s profit fell for the third year in a row by 22.2% to Ksh 52.48 billion for the year ending March 2023, due to investments in its Ethiopian subsidiary.

The increase in operating expenses was mainly driven by the injection of Kshs 55.8 billion capital investment expenditure into Safaricom Telecommunications Ethiopia PLC during the fourth quarter of FY’2023

The drop was coupled with tax hikes, cuts to the mobile termination rate, and foreign exchange challenges in Kenya.

Profit for the year ended March 2022 stood at Ksh 67.496 billion.

During the period, Safaricom increased its Group Service Revenue by 5.2% to Ksh 295.7 billion.

The group’s net income excluding minority interest declined by 10.6% attributable to expected start-up costs and investment in rolling out operations in Ethiopia within the year.

Safaricom Plc Summarized Income Statement

Income Statement FY’2022 FY’2023 Y/Y Change
Kshs (bn) Kshs (bn)
Total Revenue 298.1 310.9 4.3%
Operating Expenses (55.2) (74.1) 34.2%
EBITDA 149.1 139.9 (6.2%)
Depreciation &Amortization (39.9) (54.9) 37.4%
Net Finance and other costs (6.4) (7.1) 10.1%
Profit before income tax 102.2 88.3 (13.6%)
Income Tax Expenses (34.7) (35.9) 3.3%
Profit After Tax 67.5 52.5 (22.2%)
Dividend Per Share 1.4 1.2 (13.7%)
Earnings Per Share 1.7 1.6 (10.9%)

Source: Safaricom FY’2023 Financial Statements

Safaricom also said it expects to launch its mobile financial services in the Ethiopian market after securing the license from the central bank.

Voice service revenue declined by 2.6% to Ksh 81.1 billion; mobile data revenue grew by 11.4% to Ksh 54.0 billion, while M-PESA revenue grew by 8.8% to Ksh 117.2 billion.

“We have delivered a solid set of results despite the tough operating environment occasioned by a slowdown in business activity in an election year in Kenya, tough macro environment as well as change in mobile termination rates which impacted our voice revenues significantly. The business is stable and regained a strong positive momentum in the second half of the year,” Peter Ndegwa, Safaricom PLC CEO said.

Analysts’ commentary

“Despite the decline in performance, Safaricom continues to remain a strong long-term proposition, owing to its 65.7% of overall Kenya’s market share and over 97.0% market share in mobile money subscribers.

Additionally, we expect that the introduction of mobile money services in Ethiopia’s subsidiary will significantly gain traction and boost the Group’s performance by increasing service revenue, given that mobile money services constituted 39.7% of the total service revenue.

However, the Group’s performance is expected to be weighed down if the proposed Finance Bill 2023 is passed. This is because the mobile service provider will have to incur additional costs as the bill proposes an increase in exercise duty on person-to-person (P2P) transfers to 15.0%, from the current 12.0%.

This will act as a disincentive to subscribers as the increased costs will be passed on to them,” Cytonn Investments.

Vodafone to Sell M-PESA Holding Company for a Dollar to Safaricom

 

 

Community Engagement Editor, connecting audiences with news and promoting diverse voices. He also consults for East African brands on digital strategy.

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