The Numbers Behind Safaricom’s Kes. 21 Billion Profit.
Almost a week ago Safaricom released their financial results for 2009. As was to be expected, Safaricom delivered impressive results and once again proved that they are East Africa’s most profitable business. The stunning numbers showed that Safaricom had generated record breaking revenues of Kes. 21 Billion in 2009. At the same time, Safaricom (now) has almost 80% market share as a mobile network in Kenya after its subscriber base grew by 18% last year.
The results also showed that Safaricom had grown its pre-tax profit by 37% from Kes. 15.3 Billion last year which is mind boggling when you consider that the market has three other competing mobile networks and the economy has slowed down over the last couple of years. Incredibly, Safaricom is actually getting bigger and more profitable as each year passes and as the numbers released last week go to show.
The bigger truth about Safaricom over the last few years is that its continuous innovation and investment in the marketplace is paying off as voice and SMS revenues are now strongly complemented by Internet and M-Pesa services. Its M-Pesa business grew by 158% over the past year and its Internet business grew by 97.7%. However, its voice business grew by a modest 7.8% and the SMS business grew by 11.3% (these services are obviously maturing and are well entrenched to the core business).
A closer at the numbers shows that Safaricom really is no longer your typical mobile network. The fact that over 2.6 million mobile subscribers use their internet services and over 9.5 million use their M-Pesa mobile money service shows where the future lies -Â its no longer just voice and SMS that matter the most but the new services beyond these areas. Some of the 2009 financial year highlights as reported in the media are as follows:
- Voice revenue: Kes. 63 Billion.
- M-Pesa revenue: Kes. 7.5 Billion.
- SMS/Text revenue: Kes. 5 Billion.
- Internet revenue: Kes. 2 Billion.
Going forward, it seems that the proverbial Safaricom “tsunami” shows no sign of abating. If anything its gathering momentum at a rather startling pace. Its not just other mobile networks that have expressed concerns about Safaricom’s dominance but the Communications Commission of Kenya (CCK) recently announced (then withdrew for review) new regulations that seemed directly targeted at Safaricom. Safaricom is also hurting smaller businesses as they sell massive numbers of phones and computers at highly competitive prices to push their data services in the marketplace.
The bottom line is that Safaricom is the 800 pound Gorilla in the room that no one can ignore. Hairy, burly and able to crush any kind of opposition in its way. The wake up call goes to the other mobile networks to start innovating and reinventing themselves (radically that is!) if they are to have any chance of competing from this point onwards. They need to get the data religion and buy their 3G (and soon 4G) licenses. They need to go to market with offerings in areas such as mobile content. The writing is indeed on the wall – change before its too late and Safaricom runs off with all the spoils.