Safaricom Announces New Customer Focused Strategy

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Safaricom Announces New Customer Focused Strategy
Safaricom CEO Peter Ndegwa during the presentation of the company’s HY20/21 Results.

Company COVID-19 support to the country weighs on business performance; Sustained investment to support customer growth

Safaricom (NSE: SCOM) has announced plans to provide 100% 4G network coverage across the country by end of this year as part of its growth strategy focused on being the technology partner of choice.

Safaricom, celebrating its 20th  anniversary this year, has embarked on its next phase of growth that will be driven by a vision to become a purpose-led technology company by 2025.

Safaricom Chief Executive Officer Peter Ndegwa made the announcement as he released financial results for the half year ended 30th September, 2020 which saw net profit decrease by 6.0% to KES 33.07 billion with service revenue hitting KES 118.41 billion.

“Our business has proved to be resilient despite tough operating conditions. There is no doubt that COVID-19 has dealt a huge blow to many people not just in Kenya, but across the globe. This has been a tough period for businesses—small and large alike—and our customers. We are committed to walk through this journey together,” noted Mr Ndegwa.

Despite a 4.8% drop in Service Revenue, Safaricom increased capital expenditure by  25.5% to KES 22.75 Billion, signaling  investment commitment to building a network infrastructure that supports the country’s economic development. Voice service revenue dropped by 6.5% to KES 40.19 billion while M-PESA revenue revenue dropped by 14.5% to KES 35.89bn.

“As we go into our third decade as an organization, we aim to create a technology business by developing new digital ecosystems in health, agriculture and education sectors as we aim to provide digital solutions for our customers,” added Mr Ndegwa.

“The Board is encouraged by the positive trajectory witnessed going into second quarter of our financial year. We remain steadfast in ensuring management continues to build on the strong company position that has been established over the last 20 years, running a purpose-driven business, that continues to transform lives and drive future growth,” said Michael Joesph, Chairman, Safaricom Board of Directors.

The continued focus on customers led to a 10.2% increase in one month active subscribers for the period, with customers growing across all revenue streams.

With the new business strategy and the renewed focus on the customer, Safaricom expects to build on this momentum that has been gained during the second quarter of the period under review.

“Among the customers we will prioritise includes MSMEs & SMEs who we will empower through tailor-made services and products to enable these entrepreneurs to manage their businesses better. This includes the innovative product, Pochi la Biashara, that will allow them to separate business and personal wallets and Lipa Na M-PESA Merchant App that enables small businesses to effectively manage their business tills,” said Mr Ndegwa.

KEY HIGHLIGHTS

  • 10.5% decline in EBIT (Earnings before Interest and Tax) to KES 44.97bn with an EBIT margin of 36.3%, down 2.5ppts YoY.
  • Net Income reduced by 6.0% to KES 33.07bn.
  • Free Cash Flow down 36.8% to KES 23.60bn.
  • Service revenue contracted by 4.8% to KES 118.41bn.
  • Voice service (outgoing) revenue reduced by 6.5% to KES 40.19bn.
  • M-PESA revenue dropped by 14.5% to KES 35.89bn.
  • Mobile data revenue increased by 14.1% to KES 22.23bn.
  • Messaging revenue declined by 6.9% to KES 7.19bn.
  • Total one month active customer base increased by 10.2% to 30.31m.
  • One month active M-PESA customers increased 13.5% to 26.79m.
  • One month active mobile data customers increased 11.6% to 22.91m.