Safaricom’s net profit plunges despite gain in total revenue

Safaricom, Kenya’s top mobile telephone operator, has posted a 13 percent increase in total revenue for its full year ended March, to 107 billion (US$1.28 billion), thanks increased call tariffs and improved revenue per user, it said Thursday.

Safaricom CEO Bob Collymore said net income dropped slightly around half a billion shillings given the negative impact of forex losses and high interest costs.

Despite the drop in net profit, the company reported impressive increase in earnings from its mobile money service, Mpesa, which grew by 43percent, from KSH11.78 billion to KSh16.87 billion.
As of March, the service had 15 million subscribers with a nationwide agent-base of about 40,000.

The drop in net profit, says Collymore, was caused by among other things the increase in companies operational costs that he said increased by 19.01 percent.

“This was a result of staff related costs made up of annual adjustments in pay and the introduction of employee share grants which was aimed at increasing employee retention,” Collymore said.

Network operating expenses also increased due to costs in network expansion reflected in the KSh26 billion spent last year to boost network quality, provide additional diesel, electricity costs and lay fibre optics Safaricom expected could offer backup.

The company said 155 of its base stations are run on diesel generators on a 24-hour basis. As at March this year, it expanded its services to 2,690 sites from 2604 same time last year.

Safaricom earnings from mobile and fixed data revenue increased by 23 percent to reach KSh6.57 billion from KSh5.37 billion in 2011, which the company attributed to increased data use by its customers. The year saw Mobile and fixed Data Customers increase from 3.48 million to 4.55 million representing a 30.7 percent increase.

Revenue from voice call however remains the company’s major source of income standing at KSh68.96, an increase from 63.50 representing 8.6 percent growth, and 65 percent of Safaricom’s revenue.

In September last year, Safaricom increased the cost of calls originating and terminating within its own network by 30 percent and those ending in rival networks by 25 percent.

Safaricom’s total customer base grew by 11 percent to 19.1 million, from 17.1 million in March 2011, with a market share of 67 percent — a three percent drop from its market share as at December 2010.

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