Safaricom’s mobile money business made a profit of Sh50 billion before tax in the year ended March, contributing nearly half of the company’s total gross earnings and solidifying M-Pesa’s position as its most profitable service.
The telco in its latest annual report outlined the share of profits attributable to the mobile money business for the first time, having previously just reported the contribution to revenues.
The performance statement shows that while M-Pesa business contributed 49 percent of the telco’s profit before tax of Sh102.2 billion, its revenue of Sh107.7 billion accounted for 36 percent of the company’s total revenue of Sh298.07 billion.
This indicates that the mobile money unit has superior profitability compared to other business lines such as voice and data.
In the previous financial year, the gross profit from mobile money stood at Sh39 billion, accounting for 41.7 percent of the group’s total profit before tax.
The growing profitability has been helped by the increased adoption of mobile payments in the past two years, after the transaction limit was increased to Sh150,000 and the mobile money wallet amount raised to Sh300,000 from March 2020.
“Uptake of mobile money services continued to grow, as with its convenience and cashless nature it was perceived as helping curb the spread of Covid-19,” the telco says in the report.
“In general, the Kenyan ICT sector has experienced robust growth as a result of the pandemic having pushed consumers to adopt online ways of conducting business and mobile money payments.”
Mobile payments have also gone up among businesses, backed by the higher transaction and wallet size limits and the removal of charges for cash transfers between mobile wallets and bank accounts.
The telco has also widened the number of services it offers on the M-Pesa platform beyond personal cash transfers. Merchant and utility payments have gone up, as has the usage of mobile platforms for borrowing loans from banks and also Safaricom’s own overdraft service known as Fuliza.
This ability to scale up the number of services riding on the M-Pesa digital platform has allowed Safaricom to grow revenue from the fees on the service without having to match it with high capital expenditure.
Revenue growth for the mobile money unit, which stood at Sh25 billion in the year to March 2022, has thus outpaced that of cost of sales and operating expenses, which rose by Sh9.7 billion and Sh4.9 billion respectively in the period to Sh52.3 billion and Sh13 billion.
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