Safaricom’s net profit for the six months ended September fell by 10 percent to Sh33.5 billion as a result of a cut on the mobile termination rate (MTR) and higher costs associated with the entry into Ethiopia.
The period saw a 4.6 percent gain in total income to Sh153.4 billion, aided by an 8.7 percent growth in M-Pesa revenue to Sh56.9 billion and a 11.3 percent increase in data earnings to Sh26.3 billion.
It has also been noted that the voice revenue decreased by 3.8 percent to Sh39.9 billion, and total expenditures increased by a third to Sh31 billion, primarily as a result of the company’s investment in its new Ethiopia branch.
The telco giant also attributed the downturn in profits to a challenging macroeconomic climate, where high prices brought on by global shocks had curtailed consumer spending.
“Safaricom has done well to deliver solid revenue growth and a net income that is within the expected range,” Safaricom Chief Executive Officer Peter Ndegwa said.
“Given the impact of the MTR rates from 99 cents to 58 cents, a slowdown in business operations due to the recent elections period, increase in excise duty on sim cards, mobile phones, and a failed rain season leading to more economic hardship for the country,” he added.
In the two months that the new interim rate has been in effect, the firm claims that the decrease in MTR has generated a revenue shortfall of Sh500 million.
By the end of October, the company stated to have 740,000 members in Ethiopia, bringing in Sh98.3 million during its first month of business.
With service revenue from the new market totaling Sh9.1 million, handset sales have been Ethiopia’s largest source of income.
