M-Pesa and data revenue push Safaricom to first profit growth in three years

Kenya’s Safaricom, East Africa’s most profitable company, has posted a 1.2% increase in net profits to $480.84 million (KES62.99 billion) in the full year ending March 2024, driven by strong mobile money service and internet growth.

Revenues from M-Pesa grew 20% year-on-year, reaching $1 billion (KES140 billion) from $891.3 million (KES117.2 billion) in 2023 while mobile data revenues rose 18% to $1.4 billion (KES189.8 billion). Voice revenue declined 0.6 % to $608.4 million (KES80.5 billion).

M-Pesa’s growing profitability was driven by strong performance in B2B (39.8%) and P2P (15.4%) payments and rising uptake of the firm’s global payments platform which rose 20% year-on-year.

The firm’s operating profit increased 20% to $1 billion (Sh140 billion), becoming the first East African listed firm to cross the billion-dollar milestone.

Overall, the telco’s Kenyan unit profits jumped 13.7% to $644.4 million (KES84.74 billion) but were dragged to $324.4 (KES42.66 billion) because of higher costs tied to its entry into the Ethiopian market.

Safaricom is betting on Ethiopia to grow its regional dominance as the growth in the Kenyan market slows. Peter Ndegwa, Safaricom’s chief executive, told investors on Thursday that the firm is looking to break even in 2015.

“We are extremely pleased with what we have been able to achieve as a group despite the significant startup costs in our Ethiopia business. We expect that from 2025, Ethiopia will start being a significant growth contributor at group level for both top and bottom line,” Ndegwa said.

Ndegwa added that the regulatory environment in Ethiopia has boosted the telco’s confidence in the market, which was its first major expansion outside Kenya. In April 2024, the Ethiopian Communications Authority (ECA), the telecommunication regulator, cut mobile termination rates (MTR), leveling the field for the players in the market.

“We have doubled our active customer base to 4.4M, we have built a world-class network that is currently almost half Kenya’s size, and are on track to meet our license obligations,” Ndegwa said.