Safaricom’s profit for the half-year period ending September 2024 has decreased by 17.7 percent, amounting to Sh28.1 billion, down from Sh34.1 billion. This decline is attributed to the depreciation of the Ethiopian birr.
The company experienced a significant loss of Sh17.5 billion as the birr depreciated by 106.3 percent compared to the previous year, necessitating a revaluation of its liabilities, which include foreign currency borrowings and lease agreements.
Despite this setback, Safaricom’s core operations, particularly in Kenya, have mitigated the adverse effects of the currency depreciation.
Service revenues increased by 12.9 percent, reaching Sh177.5 billion over the six-month period. M-PESA revenues rose to Sh77.2 billion from Sh73.7 billion, driven by enhanced customer engagement.
Additionally, connectivity revenues, encompassing voice, mobile data, and fixed data services, grew to Sh91.3 billion from Sh90.8 billion.
This growth in the connectivity sector was supported by increased usage and an improvement in average revenue per user (ARPU), even as the company sought to streamline service costs through bundling strategies.
Peter Ndegwa, the chief executive officer of Safaricom Plc, stated that the company’s performance remains robust despite the challenges faced in the Ethiopian market.
“On an underlying basis our business is fantastic with the show of real, strong momentum in Kenya. Most importantly we are proud of the value we have been able to offer to our customers.
“We will continue simplifying our customer journeys and will intensify our focus on new growth areas to continue our momentum in the second half of the year,” he said.
Ethiopia’s currency, the birr, experienced a dramatic 30% depreciation against the US dollar following the central bank’s implementation of a flexible exchange rate policy on July 29, 2024.
This reform, backed by the International Monetary Fund (IMF), aims to stabilize the economy and address chronic foreign currency shortages exacerbated by past conflicts and economic mismanagement.
The shift allows commercial banks to set exchange rates, moving away from a historically fixed system.
However, this rapid devaluation has led to soaring inflation and increased living costs, significantly impacting low-income households.
