Safaricom’s FY20 creates a performance baseline for CEO Peter Ndegwa

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The newly appointed Safaricom Chief Executive Officer, Mr. Peter Ndegwa took over the leadership of Safaricom officially on 1st April 2020 following the statement of his appointment notice issued on October 25th, 2019. Everyone wanted to know what he intended to do and what his strategy would be at the helm of inarguably Kenya’s biggest telecommunication company, which he said he wants to channel his focus on Data, MPESA, and Geographical Expansion of the firm.

Well, yesterday Safaricom released its full-year results for the year ended March 31st. According to the outgoing CEO Michael Joseph, the focus for FY20 was to regain customer trust and market share which he noted that Safaricom has improved customer sentiment, brand consideration, and market share gain for the first time since 2017. One of the biggest achievements Michael Joseph leaves behind is the completed acquisition of the M-PESA brand, product development, and support services from Vodafone PLC after striking a joint venture with Vodacom.

The Full Year 2020 results puts Safaricom’s net profit for the period at Kenya Shillings 74.7 billion, a 19.54 percent increase from the FY 2019’s Kenya Shillings 63.4 billion, thanks to MPESA and mobile data revenue growth.  The service revenue increased 4.8% driven by sustained customer acquisition, recovery of mobile data growth which is now back to double-digit, along with sustained M-PESA and fixed data growth. The growth was partially offset by contraction of the betting industry and the free transaction fees associated with COVID 19 response that the company offered to Kenyans to help ease the financial constraints during the pandemic.

Voice and messaging revenue recorded a decline of 3.3% due to the competitive pressures and migration to newer technologies. The decline was also partly driven by the reduced premium rate subscriptions, what Safaricom terms as its corrective action meant to allow customers to control their mobile subscriptions.  The revenue from voice calls declined by 1.4 percent to shillings 94.45 billion from shillings 95.94 billion recorded last year, while messaging income declined by 12.3 percent to Sh17.9 billion from Kenya shillings 17.50 billion recorded in the previous FY results. Voice and messaging are now 44.4% of Safaricom’s service revenue.

M-PESA, on the other hand, grew by 12.6% to Kenya shilling 84.44 billion from shillings 74.99 billion recorded last year. The growth was driven by savings, lending, and P2P which make up two-thirds of the total growth. The mobile data revenue increased by 12.1% to KShs 40.67 billion from  KShs 38.69 billion posted last year. Mobile data now accounts for 16.2% of the firm’s service revenue. The growth was driven by increased smartphone penetration, usage, and a 28.3% reduction in effective rate per MB.

Highlights that form the baseline for the new Safaricom CEO.

  • Service revenue growth – KShs 251.22B
  • Voice (incoming and outgoing) – KShs 94.45B
  • M -PESA revenue – KShs 84.44B
  • Mobile data revenue – KES 40.67B
  • Messaging revenue – KES 17.19B
  • Fixed service revenue – KES 8.97B
  • One month active overall customers – 28.63M
  • One month active M-PESA customers – 24.91M
  • One month active chargeable mobile data customers – 19.62M

While many companies around the world continue to face unpredictable times owing to the COVID-19 pandemic and the economic impact it will have, the baseline for Mr. Peter Ndegwa has been set and his first year at work started yesterday April 29, 2020.

“I have joined Safaricom at a time when humanity is facing its biggest challenge in modern history, Safaricom has always been the pioneer in many ground-breaking innovations, and I am committed to continuing this path with a focus to tap into the vast opportunity in the Agriculture, Health, Education, and Public sectors,” CEO Peter Ndegwa said.  

“Leveraging the power of partnerships, and the digital platforms we operate, I aim to drive affordable and innovative products in mobile communication, financial services, and enterprise solutions whilst maintaining leadership in the best network quality,” he added.

Safaricom was unable to give guidance for the 2020-2021 financial years and has since postponed the dates until ‘hope visibility’ on the situation improves. Mr. Ndegwa said they’re leveraging their balance sheet strength and business model to ensure continuous innovation that will generate efficiencies for their customers and shareholders thus safeguarding the telco’s future performance.

Read Also: The appointment of Peter Ndegwa as the new Safaricom CEO has already raised eyebrows

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