Safaricom records strong Business performance

• The company has recorded a strong business performance with a robust Service
  Revenue growth in the period under review                                                                                 
• The Company Confirms commercial launch in Ethiopia
  within the 2022 calendar year as revenue hits KES
  281.1 Billion

Safaricom (NSE: SCOM) is set to launch commercial operations in Ethiopia within the year as part of the company’s regional expansion efforts to provide world-class telecommunication services to over 112 million Ethiopians.In readiness for the commercial launch, Safaricom Ethiopia has recruited a team of over 300 staff, of which 50% is local talent, with plans of reaching 1,000 in the next financial
year.

The business also has onboarded distributors, secured four retail shop locations and set up the first outsourced call centre in Addis Ababa.

Safaricom Ethiopia has secured approvals for towers development, built two data centres, made the first test call, sent out the first test SMS and completed the first data session.We have made significant progress towards a commercial launch.

We are engaging with the Ethiopian Communications Authority and other relevant partners about the requirements for ensuring a commercial launch this year,Mr Ndegwa said during the announcement of the Full Year 2021/2022 results on 12 th May which saw net income increase by 5.4% to KES 72.35 Billion for Safaricom Kenya and declined 1.7% to KES 67.50 Billion including the impact of KES 4.66 Billion financing costs for the Ethiopia business.

Mr. Ndegwa said Safaricom Ethiopia plans to bring mobile financial services to Ethiopia. However, this is subject to the licensing and regulatory process by the Government of Ethiopia.

Safaricom increased its Service Revenue by 12.3% to KES 281.11 Billion and Earnings Before Interest and Tax (EBIT) by 13.5% to KES 109.13 Billion. Voice service revenue grew by 0.8% to KES 83.21 Billion; mobile data revenue grew by 8.1% to KES 48.44 Billion, while M-PESA revenue grew by 30.3% to KES 107.69 Billion.Mr Ndegwa said:Our strong growth and achievements this financial year are due to the strong strategy execution, a dedicated staff force, and the business commitment to prioritize the needs of our customers. We will continue to be a sustainable purpose-led business as we transition to become a technology company by 2025.The continued focus on customers led to a 6.4% increase to 42.44 Million in one month active subscribers for the period, with customers growing across all revenue streams.

Safaricom invested over KES 39.34 Billion in Capital Expediture (CAPEX) in Kenya to maintain and expand the network and ensure Kenyans enjoy reliable network coverage across the country and uninterrupted data services. Safaricom Plc also invested KES 10.44 Billion in Ethiopia as we fast track our network rollout plans. This brings the total CAPEX spend for the year under review to KES 49.78 Billion a 42.4% increase from last year.
M-PESA, which marked its 15 th anniversary this year, hit the 30 million active customer mark in Kenya. A significant sign of M-PESA’s progress was the 63.4% growth of Lipa na M-PESA merchants to just below 500,000. M-PESA now has over 3.2 million businesses accepting payments under its portfolio, while the M-PESA business app has about 100,000 active businesses.

With the new business strategy and the renewed focus on the customer, Safaricom, in the new Financial Year, plans to accelerate new growth areas, delivering superior customer experience in order to be a purpose-led Technology Company by the end of 2025.

The Board is encouraged by the recovery in the business from the pandemic in the past year. Two years into Safaricom’s new strategy, the Board continues to support the management in the business plans recording strong achievements in this financial year,said Michael Joseph, Chairman, Safaricom Board of Directors.

In the Financial Year, Safaricom launched intuitive and innovative new products that directly address specific customer pain points. Such as Nyoosha Shillingi, the mobile data new pricing plan that is giving more value to our customers at no extra cost. Halal Pesa the first Shariah-compliant based digital financing product in partnership with the Gulf African Bank powered by M-PESA. Additional products in the pipeline include Visa virtual card by M-PESA GlobalPay to support international online payments and subject to regulatory approvals, the M-PESA junior product for children who may have access to mobile phones.

KEY HIGHLIGHTS
 Service Revenue +12.3% to KES 281.11Bn.
 Voice revenue +0.8% to KES 83.21Bn

 M-PESA revenue +30.3% to KES 107.69Bn.
 Mobile data revenue +8.1% to KES 48.44Bn.
 Total customer base +6.4% to 42.44Mn.
 One-month active M-PESA customers +7.8% to 30.53Mn.
 One-month active mobile data customers +6.1% to 25.22Mn 
Strong financial performance
 EBIT (Earnings Before Interest and Tax) +13.5% to KES 109.13Bn.
 Net Income
1. Safaricom Plc Kenya excluding Ethiopia Financing Costs (KES 4.66Bn), +12.1%
to KES 77.01Bn
2. Safaricom Plc Kenya, +5.4% to KES 72.35Bn
3. Free Cash Flow -1.3% to KES 63.67Bn.