Safaricom injects Sh26b into its Ethiopia unit as profit hits Sh43b

Safaricom has cut its losses in the Ethiopia business by 20.1 per cent to Sh15.5 billion in the six months to September as the telco targets to break even by 2027 amid price correction and currency reforms in the market.

During the period, Safaricom injected a further Sh26.4 billion into the business while keeping an eye on costs, keen to cushion the unit from currency depreciation.

The half-year results for Safaricom Group released in Nairobi yesterday show Safaricom Ethiopia also reduced losses in earnings before interest and taxes by 34.4 per cent to Sh24.3 billion in the period.

This is while Safaricom Kenya recorded a net income of Sh58.2 billion, a 22.6 per cent jump compared to Sh47.5 billion in the same period last year.

Overall, the Group recorded a net income of Sh42.8 billion, a year-on-year growth of 52.1 per cent, compared to Sh28.1 billion same period last year.

Safaricom Group Chief Executive Peter Ndegwa said Safaricom Ethiopia continues to operate in a challenging environment despite notable commercial progress and momentum.

“Notwithstanding these challenges, we demonstrated resilience and growth across business units, achieving milestones of going beyond 10 million three-month active customers in just two and a half years after commercial launch,” he said.

According to the results, Safaricom Ethiopia recorded 83.7 per cent growth in 90-day active customers to 11.1 million. Service revenue for the business unit grew 136 per cent to Sh6.2 billion compared to Kenya’s 9.3 per cent to Sh194 billion.

Ndegwa said currency reforms in the market are starting to create a more liquid market.

“Losses in that business have reduced by 20 per cent year on year to Sh15.5 billion as the business matures, even as pricing and currency reform challenges persist. It is important to note that the Birr depreciation against the USD and Euro contributed a third of the Ethiopia net losses,” he said.

When the results are adjusted for Birr depreciation, net income (excluding minority interest) is reduced further to Sh8.7 billion compared to Sh13.3 billion.  In the first half of 2025, this figure was Sh10.8 billion compared to the Sh28.2 billion that was reported.

"We are engaging with the government (Ethiopia) and key stakeholders to navigate market repair caused by the impact of currency reforms, which is necessary for a sustainable industry into the future," said Ndegwa.

Safaricom Group Chief Finance Officer Dilip Pal said the plan is to ensure the business breaks even in the next financial year, adding that the manner in which the currency (Birr) depreciated this period was unprecedented.

“We do expect currency to depreciate in a certain manner, but not the way it has depreciated this year. It was way over our expectations,” he said. “We have six months to go looking at things that can happen in the future.”

Pal explained that Birr has continued to depreciate against both the USD and Euro by 16.9 per cent and 33 per cent, respectively. Last year, he pointed out, Birr depreciated significantly by 106 per cent, which makes the new results an improvement despite the loss.

He said 60 per cent of earnings before interest, taxes, depreciation and amortisation in the half-year results was driven by depreciation of the Birr.

“The underlying performance excluding local currency depreciation recorded improved performance year-on-year in all lines,” he said.

“Despite not having the price correction that we anticipated, we continue to take cost optimisation measures to cushion the impact of the depreciation of currency, and this is showing in our underlying performance.”

Total funding in the Ethiopia business unit closed the period at Sh321.5 billion ($2.5 billion) compared to Sh295.1 billion ($2.3 billion).

The increase was informed largely by shareholders injecting Sh12.7 billion ($98 million) in the period and a credit line of Sh13 billion ($100 million).

As such, equity increased to Sh279 billion ($2.146 billion) from Sh266.2 billion ($2.048 billion).

Local current debt for the unit went up to Sh16.5 billion (USD 127 million) as of September, compared to Sh13.7 billion six months earlier.

“We continue to assess the funding needs of Safaricom Ethiopia more regularly to ensure it is well funded,” said Pal.