Safaricom Ethiopia has made KES 7.2 million ($43,368) in M-PESA revenue three months after it launched in August 2023.
M-PESA Ethiopia has a customer base of 1.2 million users, with 67% actively using the product. The mobile money product registered 22,700 M-PESA agents who have facilitated transactions with a total volume of 2 million and a value of KES 43.7 billion ($287 million). In Kenya, where M-PESA has been in operation since 2007, revenue grew by 16.5% year-on-year (YoY) to KES 66.23 billion ($436 million), aided by a 12.0% YoY increase in average revenue per user (ARPU) to KES 344.05 ($2.26).
Ethiopia’s other performance metrics undermined Safaricom Group’s earnings, which reported a drop in profits for HY2024, compared to a similar period in 2023. This decline is thanks to heightened financial strain on customers, higher taxes, and currency devaluation. Despite a $400 million investment by the Group, which consists of Safaricom Kenya and Ethiopia, operations in the new market are yet to yield positive returns.
After-tax profits dropped for the group
Safaricom Group’s profit after tax was KES 27.187 billion ($179 million) in the half-year (HY) ending in September 2023, down from KES 30.229 billion ($199 million) recorded in the previous year. In contrast, Safaricom Kenya’s profit after tax grew to KES 40.609 billion ($267 million) in the HY under analysis, up from KES 35.732 billion ($235 million) in a similar period in 2022. “The period under review was challenging for the business, our consumers, and the country at large. Our performance has been exceptional despite these strong headwinds caused majorly by strong economic headwinds,” said Safaricom Kenya CEO Peter Ndegwa in a statement.
Safaricom launched in the Ethiopian market in October 2022, months after testing its services in multiple cities with a population of over 120 million people. The venture was started following a bidding exercise in which Safaricom, along with its partners Vodafone Group, Vodacom Group, Sumitomo Corporation, an international trading and business investment company, and British International Investment (BII), the UK’s development finance institution, emerged as the winners with a bid of $850 million.
However, it was not clear at the time if Safaricom would launch its flagship product, M-PESA, in its new market. The development was clear after Ethiopian authorities licenced M-PESA in May 2023 at $150 million. M-PESA operations started months later, in August 2023.
Ndegwa said that the telco will not change its guidance for the Ethiopian market, although changes will be made in its Kenyan operations. “We are also revising the Kenya Capex guidance due to the foreign exchange impact from the depreciating Kenyan shilling from KSES 42 – 45 billion to KES 45 – 48 billion, consequently changing the Group guidance to KShs 85 – 93Bn. Ethiopia’s guidance remains unchanged,” he said.
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