M-Pesa, Ethiopia operations drive Safaricom's revenue surge

Safaricom has reported a 72 per cent increase in net profit to Sh50.35 billion for the half-year that ended in September 2026, an increase from Sh29.18 billion over a similar period last year, with Ethiopia operations continuing to improve performance.

While releasing the financial results yesterday, the company attributed the growth to increased revenues from its mobile money service M-Pesa, which accounted for nearly half of its earnings, as well as its internet provision business.

The telecommunications company also said operating loss for its Ethiopian business had reduced by half as revenue increased by 71.6 per cent, even as it grapples with major challenges in the country, including security risks due to ongoing conflicts in parts of the country.

The company reported a service revenue of Sh226 billion over the half-year, a growth of 13.1 per cent from Sh199.87 billion last year. M-Pesa revenue grew 13.6 per cent to Sh100.1 billion, crossing the Sh100 billion mark for the first time in a half-year period.

“Our performance reflects strong execution across our businesses, while Ethiopia's sustained growth and commercial momentum brings us closer to our target of achieving EBITDA break-even by the end of this financial year,” said Safaricom Group Chief Executive Peter Ndegwa.

“The Kenya business maintained positive momentum and continued to provide the financial strength required to invest in our network, technology platforms and future growth. In Ethiopia, stronger customer demand, increased network utilisation and improving operational execution are translating into better operating leverage and reinforcing our confidence in the long-term opportunity.”

Safaricom further said Ethiopia's service revenue increased by 71.6 per cent to Sh10.6 billion, while the number of three-month active customers stood at 15.4 million. This, Safaricom said, reflected growing demand for digital connectivity and financial services.

The neighbouring country also contributed to 17 per cent of the company’s service revenue. Ndegwa said the unit is making progress towards breaking even, with its loss before interest, tax, depreciation and amortisation (EBITDA) narrowing by 96.5 per cent to Sh434.4 million.

Mobile data remained the largest revenue contributor for Ethiopia at 74 per cent of service revenue, growing 90.2 per cent to Sh7.85 billion.

The firm said the growth in the number of data customers, as well as increasing average revenue per user, were the drivers for the surge in mobile data revenues.

Safaricom, however, said it had slowed down on network rollout following security risks as well as higher costs resulting in higher fuel costs, affecting both the company and the spending capacity among its customers in Ethiopia.

“Ethiopia continues to offer strong long-term potential supported by its large youthful population, economic reform and growing demand for digital services,” said Ndegwa.

“The successful conclusion of the recent election and formation of a new government provides greater political certainty, although localised security risks remain. The economy is resilient despite inflation and currency pressures. The conflict in the Middle East also disrupted fuel supply and increased transport costs.”

“This has affected customer affordability and temporarily slowed our network rollout. We are navigating these pressures with discipline while growing our customer base, making better use of our network and building long-term value for Ethiopia and Ethiopians.”

Safaricom is majority-owned by South Africa’s Vodacom following Kenya’s sale of a 15 per cent stake for Sh244.5 billion.

In the transaction concluded in June, Vodacom also acquired a five per cent stake from Vodafone, increasing its shareholding to 55 per cent.

In Kenya, service revenue grew 11.3 per cent to Sh216.0 billion over the half, driven by M-Pesa, which accounted for 46.3 per cent of the revenue at Sh100.1 billion.

M-Pesa revenues grew 13.6 per cent, which was despite 63 per cent of all consumer transactions, such as person-to-person transfer of amounts below Sh100, being free.

Connectivity, which is a basket of other services including traditional voice, SMS and data, raked in Sh103.4 billion, accounting for 47.9 per cent of service revenue, while fixed service contributed 5.8 per cent.

“The results demonstrate the resilience of Safaricom's business and the strength of our strategy. Importantly, this growth remains anchored in our purpose of transforming lives, ensuring that the value we create is reflected not only in our financial performance but also in the opportunities we enable for our customers, shareholders and the communities we serve,” said Safaricom chairman Adil Khawaja.

emacharia@standardmedia.co.ke