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Safaricom achieves growth despite tough 'regulatory and economic forces'

Safaricom achieves growth despite tough 'regulatory and economic forces'

Audited Safaricom results for the year ended 31 March 2017, released this morning, show a 14.8% increase in service revenue to Kshs 204.1bn as well 11.8% growth in the number of customers to 28.1m.

The telco's financial performance over the past year also indicates growth of 2.9% in voice revenue along with a 3.7% decline in SMS revenue.

Bob Collymore, CEO of Safaricom says sustained profitability in the Kenyan market, where the telco dominates with a subscriber share of 71.2% according to the Communications Authority of Kenya, has continued within an increasingly challenging business environment.

"We continue to focus on building a resilient business that can weather the regulatory and economic forces that are currently shaping the commercial environment."

Probe by authorities

Collymore defended Safaricom's dominant market position, which has been the subject of a probe by Kenyan authorities for nearly a year.

"The Competition Authority is currently engaged in a study to determine the competitiveness of our industry. This process is likely to determine the levels of dominance in different market segments of the industry and indicate the Communication Authority's direction in managing competition. While Safaricom's market share in some segments remains high, we firmly believe that this has been attained through prudential investment and continuous innovation - both of which are central to our strategy. For equitable growth in the sector, we feel it is equally important that our competitors are held up to the same standards so that our policy of sustained investment is not punished."

He also pushed back against a call made by the deputy minority leader in Kenya's national assembly Jakoyo Midiwo, among others, for a split of M-Pesa from the telecommunications company into a fully-fledged banking unit.

"We also believe that recent calls to split M-Pesa from Safaricom are ill-advised and ultimately not in the best interest of the consumer. We will continue to engage with the regulator and the ICT Ministry in this regard."

Safaricom's mobile money product M-Pesa recorded a 32.7% revenue increased to Kshs 55.1bn. It also achieved a 14.6 % increase in 30 day active M-Pesa customers to 19.0m and a 35.0% growth in monthly usage per customer to 10.0 transactions per month in the past financial year.

Nicholas Nganga, Chairman of Safaricom, who revealed that the Board has decided to extend Collymore's tenure as CEO for an additional two years, says the telco is waiting for a final report into competition within Kenya's telecommunication sub-sector.

"We expect a detailed engagement with the CA prior to the finalisation of the report on this study and its recommendation. We will also continue to urge for a more consultative process whenever issues that touch on investors' interests are concerned."

The Safaricom board has recommended a dividend of Kshs 0.97 per share – an increase of 27.5% according to Collymore which, once approved, will see shareholders receive a total of Kshs 38.86bn which is equal to 80% of Safaricom's net income or the year ended 31 March 2017.

Safaricom also revealed that it spent Sh35 billion over the past financial year on its network in recognition of the potential contribution into its revenue stream that can be derived from mobile data.

Mobile data revenue grew by 38.5% to Kshs 29.3bn over the past twelve months.

Safaricom says it now boasts a total of 4,600 base stations covering over 90% of the population.

The company says it employed 500 more people up to March 2017 and looks to add another 271 in upcoming additions to its customer care workforce.

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