Friday, May 22, 2009

Safaricom Revenues Up 15% as Profits Fall 23%

Kenyan mobile operator Safaricom posted a 14.8 percent increase in revenue for its financial year ending 31 March to KES 70.5 billion. Pretax profit fell 23.3 percent to KES 15.30 billion, due mostly to financing costs. Safaricom's subscriber base was up 31 percent to 13.36 million at end-March, from 10.23 million a year earlier, while ARPU fell 22.9 percent to KES 475. Net income declined by 23.9 percent to KES 10.54 billion, and EBITDA came in at KES 27.95 billion, 0.3 percent lower than the prior year.
However, excluding forex losses of KES 679 million, EBITDA increased 1.7 percent to KES 28.63 billion, giving an EBITDA margin of 40.6 percent. Safaricom CEO Michael Joseph told a media briefing that there was strong growth in the M-Pesa money transfer service, with 6.2 million registered users compared to 2.1 million in the previous year.
Capital expenditure in the year was KES 23.82 billion, increasing the total capital investment since inception to KES 119.8 billion. Joseph said the company delivered strong results despite the difficult economic conditions. The effects of post-election violence experienced in early 2008, high inflation driven by food and oil prices, the global economic crisis and the volatile foreign exchange rates resulting in the weakening of the shilling all combined to reduce the spending power of customers and drive up operating costs.
Joseph said competition increased significantly with the entry of two new operators, resulting in increasing tariff pressure and a corresponding reduction in tariffs of up to 40 percent. He said Safaricom continued to enhance and expand its network, requiring capital expenditure to continue at high level in order to sustain its strategy of growth.

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