Safaricom Posts Stellar 67% Profit Surge as Ethiopian Expansion Bears Fruit
Nairobi, Kenya – [Date]
Safaricom Plc, East Africa’s largest telecommunications provider, has stunned markets with a 67% leap in annual net profit, far surpassing analyst forecasts, as its aggressive expansion into Ethiopia begins to pay dividends. The Nairobi-listed firm, best known for pioneering mobile money service M-Pesa, reported a net income of KSh 74.9 billion ($573 million) for the year ending March 2024, up from KSh 44.9 billion ($343 million) the previous year. The results signal a remarkable turnaround for its Ethiopian subsidiary, which significantly narrowed losses in its second year of operation—a development that bolsters confidence in Safaricom’s ambitious pan-African growth strategy.
A Strategic Bet on Ethiopia Pays Off
Safaricom’s foray into Ethiopia, Africa’s second-most populous nation with 120 million people, was one of the continent’s most closely watched telecom liberalizations. In 2021, the Kenyan firm—partly owned by Vodacom Group and Vodafone Plc—led a consortium that secured one of only two private telecom licenses in the historically state-controlled market, committing $850 million in initial investments.
Early challenges were steep. The Ethiopian operation, branded as Safaricom Telecommunications Ethiopia, posted a KSh 15.5 billion ($118 million) loss in its first year (2022–23), weighed down by infrastructure costs, regulatory hurdles, and stiff competition from state-owned Ethio Telecom. However, this year’s financials reveal a dramatic improvement, with losses shrinking to KSh 4.3 billion ($33 million)—a 72% reduction—as subscriber numbers surged past 7 million and service revenue hit KSh 28.3 billion ($216 million).
“We are seeing strong traction in Ethiopia,” said Peter Ndegwa, Safaricom’s CEO, in an earnings call. “Our investments in network coverage, competitive pricing, and localized services are resonating with customers.” The subsidiary now covers 24 cities and aims to reach 25% population coverage by mid-2025.
Core Business Strength in Kenya
While Ethiopia’s progress captured headlines, Safaricom’s home market remained its profit engine. Revenue in Kenya grew 12.4% to KSh 335 billion ($2.56 billion), driven by:
- Mobile Data: A 22.3% spike in usage as 5G rollout expanded to 35 towns.
- M-Pesa: The fintech giant processed KSh 41 trillion ($313 billion) in transactions, up 19%, with revenue hitting KSh 117 billion ($894 million).
- Voice Services: Defying global declines, voice revenue edged up 3.2%, aided by competitive bundling.
However, Kenyan operating costs rose 13.5% due to inflation and spectrum fees, squeezing margins slightly.
Market Reaction and Analyst Insights
Investors cheered the results, sending Safaricom’s shares up 5.2% in Nairobi trading—their biggest single-day gain in eight months. “The Ethiopia turnaround is ahead of schedule,” said Faith Mwangi, equity analyst at Standard Investment Bank. “If they sustain this momentum, breakeven could come by 2026.”
Yet risks linger. Ethiopia’s currency devaluation (the birr has lost 50% since 2022) and forex shortages complicate profitability. Safaricom also faces regulatory scrutiny in Kenya over market dominance, with lawmakers debating stricter antitrust rules.
The Road Ahead: 5G and Financial Services
Looking forward, Safaricom plans to:
- Accelerate Ethiopian network expansion, targeting 100+ cities by 2026.
- Launch M-Pesa in Ethiopia pending central bank approval—a potential game-changer in a cash-heavy economy.
- Scale Kenyan 5G adoption, with 1 million devices now on the network.
“Africa’s digital transformation is irreversible,” Ndegwa asserted. “Our strategy is to lead it.”
Balancing Optimism with Caution
Safaricom’s stellar performance underscores its resilience in turbulent markets, but challenges—from currency volatility to political risks—remain. As the firm straddles two of Africa’s largest economies, its ability to navigate these headwinds will determine whether this growth story becomes a blueprint for African telecom success or a cautionary tale of overreach. For now, shareholders and customers alike have reason to celebrate.
