Safaricom Profits Up to Sh9.1 Billion in Kenya

Mergers, Acquisitions and Financial Results

Safaricom's half year pre-tax profit for the period ending September 30, 2009 rose 1.7 per cent against a competitive environment and dwindling average revenue per user (ARPU). The company's pre-tax profit grew from Sh8.9 billion recorded over a similar period in 2008 to reach Sh9.1 billion.

The company's board chairman Nicholas Ng'ang'a termed the earnings satisfactory of a the firm that controls 83 per cent of the market in terms of revenues. Safaricom grew its income by 17.8 per cent from Sh34.5 billion the same period last year to Sh40.6 billion in which voice calls contributed 77.6 per cent, the firm's chief executive Michael Joseph told an investor briefing in Nairobi on Wednesday.

Revenue from voice increased by 6.2 per cent from Sh29.7 billion to Sh31.5 billion. During the same period last year, revenue from voice contributed 86.1 per cent. The average revenue per user was down 7.3 per cent from Sh503 to Sh466.5, which means that Kenyans are making less voice calls.

Data and SMS income increased by 93.6 per cent from Sh3.7 billion in the previous period to Sh7.2 billion. Data is one of the fastest growing Safaricom products. In the current period, revenue from this segment rose by 159.8 per cent from Sh0.5 billion last year to Sh1.3 billion.

Joseph said that in next financial year, the firm will form a subsidiary to grow data products, which it banks on to contribute to its bottom line by about 25 per cent in the next three to five years. M-Pesa which as at September had netted about eight million subscribers, saw its revenues grow by 247.5 per cent from Sh0.9 billion in the previous year to Sh3.2 billion. The firm's operating expenses rose from Sh15.3 billion last year to Sh18.8 billion.

Safaricom, which has been on an aggressive expansion drive, said the higher expenses were from commissions related to its money transfer service, interconnection costs and the increased cost of attracting new customers. Joseph said the 3G network has been extended to cover more towns in Nairobi, Central Kenya, Rift Valley, Western Province and Nyanza in a move aimed at growing its data market.

"One Communications Ltd - our existing WiMax firm, continues to provide fixed data services to corporate and medium sized institutions and individuals thereby complementing our 3G mobile internet," said Joseph.

The firm has also entered into a purchase agreement for a 100 per cent stake in Packet Stream Data Network Ltd, a WiMax provider during this financial year in which the contract precedents are being finalised. Once done, Joseph says, it will allow them to roll-out a national fixed data service.

Daily Nation