Kenya’s leading telecom operator, Safaricom (SCOM.NR), reported a resilient first-half financial performance, driven by a robust domestic market that counteracted a decline in group core earnings. Core earnings in Safaricom’s Kenyan business surged by an impressive 14.9%, attributed to a strategic reduction in product and service prices.
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This price adjustment successfully bolstered usage, despite challenges posed by high living costs and tax increases impacting consumers’ disposable incomes.
Following the positive results, Safaricom’s shares experienced a notable increase of over 8%, accompanied by an upgraded full-year earnings before interest and taxes (EBIT) guidance. Peter Ndegwa, Safaricom’s CEO, expressed confidence in Kenya’s performance, stating, “We believe Kenya will deliver a much higher performance.”
However, Safaricom’s group EBIT saw a decline of almost a fifth between April and September, primarily attributed to losses in Ethiopia. The company entered the Ethiopian market last year, expecting peak investment losses this financial year before breaking even in 2026.
Despite challenges in Ethiopia, Safaricom reported growth in key areas. Revenue from the M-Pesa financial services platform increased by 16.5% due to higher usage, and mobile internet services revenue saw a notable rise of 12.5%.k
Safaricom emphasized its commitment to cost containment through the use of renewable energy to power transmission sites, reducing reliance on expensive diesel. Additionally, the company secured a sustainability-linked loan in September and plans to explore more green financing options, including the possibility of a green bond, according to Chief Financial Officer Dilip Pal.
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While Safaricom posted a loss of 25 billion shillings in Ethiopia, the positive performance in Kenya mitigated concerns, with investors viewing the overall business landscape favorably. Ethiopia, with around 120 million people, presents a significant market despite its challenging operating environment, making it a strategic but bold venture for Safaricom.