Safaricom Plc has incurred an 18.4 per cent decline in profitability through six months of operations to September 30 with net income in the period dipping to Ksh.30.2 billion following the Ethiopian expansion.
Safaricom Ethiopia was expected to break in at least four years and so far it has returned a loss of Ksh. 4.1 billion from an operation cost of Ksh. 6 billion.
Speaking at investor briefing on Friday, Safaricom Chief Finance Officer Dilip Pal said the company has invested $598 million in Ethiopia operations and is encouraged by the early uptake of services in the new market. This comes after the unit being only a month into commercial operations at the end of the financial reporting cycle has shown momentum with 740,ooo customers on board as of October 31.
“These results are in line with our expectations. Safaricom Ethiopia requires significant capital investments before it can turn a profit,” noted Safaricom Plc Chief Finance Officer Dilip Pal.
During the period, Safaricom Kenya posted a slower rate of growth by net income at 0.6 per cent largely from a tough operating environment which saw increased customer acquisition costs with taxes being levied on new SIM cards from July this year and a reduction in mobile termination rates (MTRs) which cost Safaricom Ksh.470 million in the period.
“The half-year under review was challenging for all of us. On the regulatory front, a review of mobile terminations rates and the introduction of new taxes on SIM cards and mobile phones slowed down industry momentum,” said Safaricom Plc CEO Peter Ndegwa.
M-PESA revenue went up 8.7 percent while mobile data grew 11.3 percent in the same period to Ksh.56.9 billion from Ksh.52.3 billion a year ago.

Regardless, Safaricom has now retained its outlook for its full financial year to March 2023 and expects pre-tax profits to range between Ksh.87 billion and Ksh.93 billion.

By Jane Kibathi.