Safaricom 2018 Results, Driven by M-Pesa and Data Growth.

This morning Safaricom released their March 2018 results, reporting that they had overcome a challenging year in Kenya to post record results as their shares also touched record highs.

Kenya’s largest company reported revenue of Kshs 224.5 billion (~$2.24 billion), a 10% increase shillings an EBIT of Kshs 79.3 billion, and a net income of Kshs 55 billion ($553 million). They will pay out a Kshs 44 billion ($440 million) as dividend (Kshs 1.1 per share)  to their shareholders.

As was the case the previous year, the results were driven by innovations in data, and mobile money (M-Pesa_. Mobile data revenue was Kshs 38.4 billion (up from Kshs 29.3 billion) and data usage per customer has grown to 56% to 421 MB, with more than 90% of data consumed through bundles which offered customers better value and freedom of usage.

M-pesa revenue was Kshs 62.9 billion as customers had moved from traditional M-Pesa to payments. The company has signed over 100,000 Lipa-Na-M-Pesa merchants and customers did 147 million Lipa na M-pesa transactions, an increase of 63%. Safaricom had reduced merchant fees by 50% and also made customer transactions that were smaller than Kshs  200 ($2) free of charge. In financing, Safaricom now issued 3 (micro) loans every second through partnerships with banks – M-Shwari (CBA) and KCB’s M-Pesa. Overall, M-pesa accounted for 28% of service revenue, and mobile data was 16% reducing Safaricom’s earlier reliance on voice and SMS which together were still a significant 50% of revenue.

These results were achieved in a year that Kenya had a prolonged electioneering period which slowed economic activity while credit growth was also the slowest in 14 years. But in releasing the results, Safaricom director, and former CEO, Michael Joseph cautioned that a draft industry competition study had proposals that seriously concerned Safaricom such as the introduction of price controls and regulated infrastructure sharing. The proposals, he said, would prevent Safaricom from rolling out services that their competitors could not replicate.

The results announcement also saw a surprise reappearance (via video) of Safaricom CEO Bob Collymore who took personal leave late last year to seek medical treatment. Collymore announced that he was completing the final phases of his treatment and expected to be back in Nairobi in a  few weeks once he was cleared to travel by his doctors.

Some ongoing innovations include in food security (Digi Farm and Connected Farmer) and healthcare (M-Tiba which now has 1 million users. They recently created an agri-business department that will to seek to deliver mobile-based solutions to address food security in the country. Also, the Safaricom Foundation is refreshing its strategy to address sustainable development of communities in three areas; education, health, and economic empowerment.

Going forward, Safaricom projects EBIT of Kshs 85 – 89 billion for 2019 as they look to drive shareholder value through growing M-Pesa across borders, and appropriate partnerships and in environments with the right regulations, Also from e-commerce and they recently signed payment partnerships with PayPal and the Google.