Safaricom Plc, an important company in Kenya with a considerable market value, said its net income rose by 2.1%.
The company made 225 million, or 34.2 billion shillings, more in net profit. This is the first rise in two years. According to Reuters, this good financial success comes after strategic moves like lowering prices and increasing M-Pesa income, which makes up 42% of the company’s service revenue.
Safaricom shares rose 5.6% in Nairobi after falling 43% this year. This shows that investors are confident in the company’s results report.
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The report reported that Safaricom made more money by lowering prices to draw users. Since 2020, the company has cut data prices by 65%, calls to other countries by 44%, and M-Pesa by 61%.
Peter Ndegwa, CEO of Safaricom, said that this approach has led to more people using the service. He told investors on Thursday that inflation worldwide and in the United States put “accelerated pressure on the consumer wallet” in the six months before September.
Ndegwa said that companies are under a lot of pressure to deal with rising costs of things like energy and foreign exchange while also running correctly and helping customers who are having a hard time.
Kenya’s bad economy may affect consumers. Additionally, increased taxes limit their spending.
A similar item reported that decreasing products and service prices boosted the Kenyan company’s core earnings by 14.9%. Even though high living costs and tax rises constrained customers’ spending power, the business observed higher usage, helping its Kenya operations.
Last month, the corporation fired 33 employees for corruption and fraud in the fiscal year ending March 2023.
Kenya’s Safaricom profit offsets Ethiopia’s loss.
Safaricom’s sales in Kenya have helped offset losses in Ethiopia, where it commenced operations last year. Peak investment losses are predicted this year, but the Ethiopian enterprise hopes to break even in 2026.
In Ethiopia, Safaricom acquired the first commercial telecoms license in 2021 but lost 25 billion shillings.
Safaricom’s 16.5% M-Pesa revenue growth and 12.5% mobile internet growth in Kenya represent its strong performance. These numbers demonstrate the company’s durability in its local market despite the economy.
Safaricom also has a strong sustainability ethic. Renewable energy has helped the corporation cut transmission site costs instead of fuel. A consortium of local banks gave the telecom operator a sustainability-linked loan in September, and it aims to pursue green financing, including a green bond.
According to Standard Investment Bank analysts like Eric Musau, the company’s foray into the Ethiopian market is hazardous and could result in losses, but its outstanding performance in Kenya helps investors feel optimistic.
It’s a vast market, so losses are a problem, but the Kenyan business offsets them, which is excellent for investors.