With less than forecasted revenue base, East Africa’s largest telecoms company, Safaricom is facing severe pressure as it reported a 10% drop in its first-half net income, citing higher cost of living, rapid inflation and an expensive network rollout in Ethiopia.
The company, which is part owned by JSE-listed Vodacom Group, said the income for the reported quarter ended 30 September came in at KSh33-billion (R4.7-billion).
Core earnings, which include interest and taxes, fell 11.5% to KSh51.2-billion, the group said, as revenue from key business lines such as M-Pesa and data services grew at a slower pace.
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It also blamed the drop on a cut in the rate it charges other networks for calls to its subscribers in Kenya, sending down revenue generated from calls.
“It (the price cut) is not inconsequential or trivial … it has a substantial impact on our business,” group CEO Peter Ndegwa said at an investor briefing.
Kenyan businesses were also affected by jitters over a presidential election in August.
Still, Safaricom retained its core earnings forecast of KSh87-billion to KSh93-billion, but lowered its outlook for the Kenyan business.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry