Kenya’s integrated telecoms operator Safaricom yesterday reported its financial results for the half-year as of end of September 2012, showing M-Pesa, the Vodafone mobile money transfer service, as the crown jewel across all its offerings.
Safaricom Ltd’s positive financial performance in the reporting period saw the Kenyan company’s total revenue grow by 19 percent to KSh59.1 billion.
At the results’ presentation on Thursday, Safaricom’s chief executive Bob Collymore said: “We are relieved to have recovered from the damaging price wars. We are now focusing on customer growth.”
Customer growth is exactly where the company has been focusing especially with M-Pesa, as he reported that the mobile money transfer service now accounts for 18 percent of Safaricom’s total revenues and has also seen significant customer growth.
Collymore said that M-Pesa’s registered customers had significantly grown to 9.7 million active customers (i.e. use M-PESA at least once every 30 days) with 15.2 million customers in total.
Also notably on the increase was the amount of M-Pesa agents across the East African country. Collymore said: “We have actively increased our number of M-PESA agents by 6,000 over the last few months, closing at 45,540 agents nationwide.”
Non-voice services and products like M-Pesa and data services boosted Safaricom’s profit and helped it increase by 93.7 per cent to KSh7.77 billion.
M-Pesa though remains the crown jewel. It now accounts for 31 percent of Kenya’s GDP through transactions, and it is this that will see UK’s Vodafone Plc in the pound seats.
Vodafone is the single largest shareholder in Safaricom with 40 percent of shares and five representatives at board level within Safaricom. Apart from their shareholding and the benefit they derive when Safaricom declares dividends or the financial benefit they derive from being a shareholder, Vodafone is paid licence fees by Safaricom as the two companies have an agreement that they signed before the launch of M-Pesa five years ago.
As such, they (Vodafone), will probably turn out to be the largest beneficiary of the growing M-Pesa revenues and profits.
It is reported that Vodafone has been paid approximately KSh1.1 billion of the Sh10.4 billion revenues that Safaricom reported M-Pesa had generated in the financial half-year to September 2012.
This is an increase to the supposed KSh866 million it earned last year from M-Pesa alone.
It is further reported that the agreement between the two companies states that “the fee is payable quarterly and is capped at 25 per cent of every quarter’s revenue with a floor of 10 percent, but Vodafone has been earning about 11 per cent of M-Pesa revenues over the past two years.”
This means that even before the results were declared yesterday, Vodafone had already received its “license fee” for M-Pesa as it is paid quarterly, as it holds the “intellectual property rights” over the mobile money transfer service.
This makes Vodafone the single largest beneficiary of the growing uptake of M-PESA in Kenya.
