: Safaricom’s Steady Foray into Ethiopia Sees Profits Dip for Third Year Straight, Reaching $481 Million

by | May 11, 2023 | Business, News | 0 comments

In a bold expansion move, Safaricom, the Kenyan telecommunications giant, has recorded its third successive year of dwindling profits, a consequence of its substantial investments in its new Ethiopian operations. The full-year profit, as of March 2023, has decreased by 22.2 percent, as disclosed in the company’s latest financial statement.

Safaricom’s profitability dwindled to Sh52.48 billion (approximately $481 million), a noticeable decline from the previous year’s Sh67.49 billion ($617 million). This ongoing trend of decreasing returns is a clear reflection of the heavy capital commitments the telecom company has made in its Ethiopian venture.

These financial results were revealed on Thursday morning, coinciding with an announcement from Ethiopia’s banking authority, the National Bank of Ethiopia. The regulator has granted Safaricom a license to introduce M-Pesa, its mobile money service, in Ethiopia, with the license acquisition costing the telco a hefty $150 million.

Safaricom’s Ethiopian venture, which began operations seven months ago, is projected to reach the break-even point after four years of operations. The Ethiopian unit reported a net loss of Sh21.7 billion ($199 million), in stark contrast to the Kenyan unit’s Sh74.5 billion ($683 million) profit, propelled by substantial growth in mobile data and mobile money services.

M-Pesa’s revenue swelled by 8.8 percent to Sh117.2 billion ($1.07 billion), and income generated from mobile data services saw a 10.7 percent rise to Sh53.6 billion ($491 million). This marks the first time that income from mobile data services has exceeded the Sh50 billion threshold.

In light of these results, the board has proposed a final dividend of Sh0.62 per share. Despite the challenges faced, Safaricom’s bold move into Ethiopia marks a significant moment in its growth story, signifying its commitment to expanding its digital footprint across Africa.

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