Safaricom’s Subscribers Grows as Data and M-Pesa Boosts its Earnings

Safaricom has announced its full year results for 2010/2011. The results were surprising, thought provoking and kind of assuring considering the complaints from the operators and also the industry analysts regarding regulation, competitions and the market outlook. Key among them was that Safaricom was able to have a growth in active customers by 8.8% to 17.18Million compared to March 2010. This surprised the pundits who believed that with the strong re-branding and price cuts by Airtel and onslaught by other operators, there would have been a decline on the Safaricom clients.

Most impressive was the growth in Mobile and Fixed data with the sector realising an 80.3% growth in revenue to earn Ksh 5.4 Billion while the the number or fixed data clients grew by 466% to 4,483 while the mobile data clients shot by 85.6% to 4.9 Million. Safaricom CEO, Bob Collymore, was prodded on the state of the LTE network they were suppose to roll-out. Collymore said that the main problem with deploying 4G is that there are not enough spectrum since those holding them don’t want to release them and are not using them. Safaricom has been testing its 4G network for the last 8 months according to Bob Collymore.

The CEO also said that in his travel to shop for devices to support 4G, not much exist and so the best connection for mobile user now is still 3G. Safaricom though increased its WiMax stations from 140 to 186, 3G stations grew from 607 to 1140 and total base stations stood at 2501 up from 2162 in March 2010. To increase the focus on internet clients, Safaricom has created the Safaricom Business division to provide data, hosting and cloud services which are personalised to the clients. Safaricom can now provide upto 100 Mbps through the fixed data after the launch of Fibre to the Homes.

Despite Safaricom declaring voice as unprofitable sector last year after the more than 70% slash in voice call costs, it still remains the highest revenue driver. Voice revenue accounted for 66.9 per cent of total revenue last year down from 68.6 per cent in the 2009/2010 financial year. Data, SMS, M-Pesa and acquisition revenue accounted for over 1/3 of the total revenue earned with M-Pesa only bringing Ksh 11.8 Billion in revenue which translates to 56% increase. 81% (13.8Million) of Safaricom clients now use M-Pesa. M-Pesa agents stand at 26,948 with 657 paybill partners. Person-to-person transactions for the last one year stood at Ksh 47 Billion ($570 Million) while the cumulative transaction since the service’s inception is at Ksh 828 Billion ($9.98 Billion).

Safaricom also sold over 500,000 data enabled handsets and laptops within the last one year ending March 2011. Over 3.9 Million (22% of Safaricom subscribers) users are subscribed to Skiza, the caller ringback tone service.

Mr Collymore also said that Safaricom is increasing the density of the base station. Bob also reiterated that Safaricom still thinks that lower Mobile Termination Rates are not good for the market and further lowering of the same will see job losses and reduced expenditure in infrastructure and marketing by the operators. A new partnership with Huawei has already seen Safaricom comfortably control the nascent smartphone market and Safaricom will be be using its might to negotiate with device manufacturers like Apple to bring more innovative products to its table. Insider sources intimate that Safaricom is already talking to Apple and sooner or later, iPhone and iPads might just also be provided through Safaricom.

Orange has been the exclusive seller of iPhones in Kenya with iPads not officially launched in the country. Orange is not selling the iPhones lately opting to sell it to individuals on condition that its is bought through corporate arrangement.

Safaricom announced that it will pay Ksh 8 Billion as dividend with Ksh 0.20 paid per share earned which translates to Ksh 0.33 as the earning per share. Payout ratio increased by 7% to 60%. Dividend will be paid to shareholders by December 2011.

Safaricom has promised to continue to invest in Value Added Services, Data, Network, and acquisition products.