Key things that stood out from Safaricom’s Half Year Results for 2015

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L-R, John Tombleson (Chief Financial Officer), Bob Collymore (CEO - Safaricom Ltd)

In a bid to comply with Kenyan regulations, Safaricom released its half year results and they indicate that the company will continue being the dominant player in the telecommunication business. From the look of the results, it is evident that Safaricom is not about to stop winning and becoming one of the most successful companies in Kenya and in the region.  Safarcom has an impressive 15.8% growth in Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) to Kshs 38.8 billion. Safaricom’s net income went by 22.9% to stand at Kshs 18.1 billion.  The  National Police Security Network Project construction tied up Safaricom’s cash so Free Cash Flow was down 38.5% to Kshs 9.5 billion.

L-R, John Tombleson (Chief Financial Officer), Bob Collymore (CEO - Safaricom Ltd)
L-R, John Tombleson (Chief Financial Officer), Bob Collymore (CEO – Safaricom Ltd)

Giving his remarks, Safaricom CEO, Mr. Bob Collymore said that putting customers first, providing relevant products and enhancing operational excellence has contributed majorly to the success realized by the firm. In addition, the company has restructured its sales and operations teams into regions that has enabled it to take services closer to the customers and enhance their experience. In turn, this has lead to customer loyalty as well as strong financial and commercial performance. The company has a customer base of 25.1 million subscribers.

Key figures

Service revenue growth of 12.3% to Kshs 84.9 billion
14.9% increase in total customer base to 25.1 million
Voice service revenue grew by 3.5% to Kshs 45.2 billion
Messaging revenue grew by 11.3% to Kshs 8.0 billion
M-PESA revenue increased by 24.1% to Kshs 19.4 billion
22.7% increase in 30 day active M-PESA customers to 15.7 million
40.9% growth in mobile data revenue to Kshs 9.2 million
25% increase in 30 day active mobile data customers to 13.1 million
Fixed service revenue growth of 24.9% to Kshs 1.9 billion

Safaricom Ltd. offers services and products that set it well above its competitors. The company always appears to effortlessly beat its competitors with its innovations and partnerships with banks. Some of the key issues that stood out at the release of the Half Year Results include:-

M-PESA

This remains to be the key innovation for Safaricom as revenue keeps growing through this channel. Almost every Kenyan has used or benefited from this innovation that was launched in 2007. There has been an increase in the number of the M-PESA agents leading to accessibility of the service by more people. This has contributed to an increase in the revenue realized by the company.

Lipa Na Mpesa service

What would happen if you walked in your favourite local, drunk your favourite drink but realized you don’t have liquid cash to pay for it? The scene would be chaotic right? Safaricom has stepped in to ease the transactions between merchants and their customers but coming up with this service. The number of merchants using this service now stands at 36,400 who receive payments for their products and services through it. This continues to be a major driver in delivering the company’s financial inclusion agenda as well as leveraging on the new G2 M-PESA system to roll out new products and services.

Increased coverage

The mobile phone sector is still growing, the need for increased connectivity is there and to tap into this, Safaricom has worked to improve network quality by increasing coverage and capacity to ensure excellent performance and superior customer experience. More money has been invested in this area as compared to last year. From this accelerated investment, the company is able to realize the benefits of the additional network in this year.

SMS/Mobile data bundles uptake

With the wide penetration of smart phones in the country, it goes without saying that there would be an increased consumption of these services by many people. What Safaricom has done to take advantage of this great number of customers is to subsidize the cost of purchasing the data bundles such that they get more for less money. The rolling out of the 4G network promises to continue putting the company way ahead of its competitors. The belief that customer is king is one that is held by the successful firm and it is for this reason that the customer continues to come first in its strategy. Mobile data is the fastest growing revenue stream for Safaricom. There is a plan to increase the numbers of 3G and 4G smart phones on its network.

The company continues to focus on achieving cost efficiency by improving its processes and striving to achieve operational excellence. The operating cost has increased this year and this could be attributed to the depreciation of the Kenyan shilling by 17.9% against the US dollar, as at 30th September 2015 compared to the same time last year.

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