Safaricom posts a reduced Ksh. 10 Billion net profit for HY 2024

Safaricom has announced that it has posted Ksh. 10 billion net profit for the half year period ended September 30, 2024. This is a major reduction from the Ksh. 27 billion the company posted for a similar period in 2023.

Kenyan unit delivers record profitability

Safaricom PLC Kenya demonstrated remarkable financial health, with service revenue growing by 12.9% to reach Ksh. 177.5 billion. This strong revenue generation translated directly into significant profit increases:

• Earnings Before Interest and Tax (EBIT): Soared by 18.0% to Ksh. 79.2 billion.
• Net Income: Climbed by 14.1% to Ksh. 47.5 billion.
• Notably, the Kenyan operation’s Operating Free Cash Flow (OFCF) saw a massive jump of 41.4% to Ksh. 80.6 billion, underscoring strong cash conversion.

Dr. Peter Ndegwa, CEO Safaricom PLC, attributed the success to strategic focus. “This performance, which comes at a time when we are marking 24 years of connecting and transforming Kenyans’ lives, reflects the relentless execution of our strategy,” he stated. “We will continue growing our core business while expanding into new services through our innovative spirit.”

At the Group level, service revenue increased by 13.1% to Ksh. 179.9 billion. However, the Group’s reported net income was impacted by external factors related to its new operation in Ethiopia.

While Group EBIT grew modestly by 1.8% to Ksh. 42.2 billion, the reported net income contracted by 17.7% to Ksh. 28.1 billion. This contraction was primarily weighed down by the impact of Ethiopia’s ongoing foreign exchange regime reforms and hyper-inflationary accounting.

Crucially, Net income on an underlying basis (excluding these impacts) grew strongly by 27.1% to Ksh. 36.7 billion, providing a clearer view of the operational strength.

Growth Drivers: M-PESA and mobile data

The growth was heavily reliant on the digital and data segments:

• M-PESA remains a cornerstone, contributing 42.9% of Group revenue at KES 77.2 billion, an increase of 16.6% year-on-year.
• The mobile connectivity business (voice, data, and SMS) contributed 52.2% of revenue, amounting to KES 93.9 billion.
• Mobile data revenue was the fastest-growing segment, increasing by 21.5% to Ksh. 37.6 billion.

In Ethiopia, Safaricom is making rapid progress in network build-out and customer acquisition, now covering 46% of the population.

The customer base grew by 47.3%, hitting 6.1 million monthly active customers. Furthermore, data usage in Ethiopia excelled, closing at 6.6GB per average user compared to Kenya’s 4.1GB, indicating high engagement.

To mitigate the short-term financial impact from the foreign exchange volatility, Safaricom Ethiopia has taken decisive steps, including renegotiating foreign currency denominated contracts and onboarding local suppliers.

Adil Khawaja, Safaricom’s Board Chairman, expressed confidence in the company’s regional vision. “The Board is pleased with the great performance recorded… We remain focused on our vision of becoming Africa’s leading purpose-led technology company as we advance our propositions in both Ethiopia and Kenya.”