Safaricom reported their earnings last week which provides an opportunity to update the numbers on M-Pesa as well as the overall health of Safaricom. As has been well covered locally, Safaricom’s revenues grew while profits fell. Intense competitive pressure from Airtel caused a significant reduction in voice pricing that lowered overall profitability; however, the strong growth in M-Pesa, SMS and broadband revenue compensated for the flat voice revenue.
Having dived through the numbers a bit, there are some nuggets that I have not seen elsewhere. Part of that is due to the fact that Safaricom reported annual figures that cover up some of the trends exposed when looking at the numbers for both H1 and H2. Quickly, those nuggets are:
- M-Pesa accounted for 13.8% of Safaricom’s revenues in H2 of their FY 2011. That’s a 23% increase over the 11.2% in the previous 6 months.
- Voice revenue in H2 fell to their lowest level in 2 years. This is not surprising given the slashed tariffs but it is the new reality.
- Revenue was virtually flat between H1 and H2 of FY 2011. This is a big slow-down due directly to the voice revenue fall and something Safaricom must be very worried about.
- Profit before tax and net income both showed steep declines between H1 and H2. This should worry investors even more than the overall declining full FY numbers.