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Safaricom mulls new rural connectivity plan

Kenya , 29 Apr 2020
Mobile data revenue has increased and bolstered Safaricom's full year results released today.
Mobile data revenue has increased and bolstered Safaricom's full year results released today.

Mobile data revenue for Safaricom has increased by 12% to record Kshs 40.67-billion according to the company’s full year results released today.

The boost in revenue was driven largely by the growth of 4G smartphone use and favorable data packages including non-expiry data plans introduced earlier this year.

The company is now seeking to introduce a programme that will enable rural and low income users to switch from 2G phones and acquire smartphones. The device financing programme dubbed Lipa Mdogo Mdogo (‘pay in installments’) will enable customers to acquire smartphone devices and pay a daily fee of Kshs 20.

Safaricom CEO Peter Ndegwa said: “Despite the high percentage of mobile penetration in Kenya, there remains a large population in this country that still uses 2G phones. Tough economic environment being the main reason they cannot afford smartphones.”

Ndegwa said the programme, to be run in partnership with Google and TeleOne, is still under a pilot phase and the objective is to ensure 4G smartphone access for one million customers.

Shrinking industry

Mobile money revenue continued to grow despite the impact of COVID-19 and a shrinking betting industry.

According to the company Kshs 1.9-billion was not realised in betting revenue, while zero rating M-Pesa transactions under Kshs 1,000 also had a negative impact.

“This growth was driven by savings and lending and P2P which make up two thirds of the total growth,” the company reported.

Safaricom is upbeat about the growth potential of the M-Pesa brand following the company’s deal with Vodacom PLC.

“This initiative will enhance M-Pesa’s growth in Africa by giving us both full control of the M-Pesa brand, product development and support services as well as the opportunity to expand M-Pesa into new African markets,” said outgoing Safaricom CEO Michael Joseph.

M-Pesa revenue grew by 12.6% to Kshs 84.44-billion.

Overall, Safaricom’s revenue stood at Kshs 251.2-billion while its pre-tax profits soared to Kshs 101-billion with after-tax profit at Kshs 71.7-billion. Voice revenue still topped income at Kshs 94.45-billion.

This year, the company decided not release any revenue guidelines for future earnings due to uncertainties in the global economy.

Ndegwa said, “Due to the uncertainty emanating from the COVID-19 pandemic, many parameters that would normally be factored in for a prudent guidance are unclear, and changing by the day. As a result, we have decided to postpone giving guidance until Q2 of FY21when we hope visibility on the situation improves.”

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