Safaricom lose Sh300m in six months

In Summary

•The telco's financial results show revenue from mobile data dropped to Sh19.2 billion compared to Sh19.5 billion in the first half of the year

•The firm's chief financial officer, Sateesh Kamath attributed the drop to the increased excise duty on airtime from 10 to 15 per cent.

Safaricom CFO Sateesh Kamath
Safaricom CFO Sateesh Kamath
Image: ENOS TECHE

Safaricom lost Sh300 million in mobile data revenue in the second half of the year ending March 31, 2019 due to an increase in taxes.

The telco's financial results show revenue from mobile data dropped to Sh19.2 billion compared to Sh19.5 billion in the first half of the year. 

Speaking to the Star, the firm's chief financial officer, Sateesh Kamath attributed the drop to the increased excise duty on airtime from 10 to 15 per cent.

While the half-year revenue recorded a drop, year on year revenue grew at a slower pace of 6.4 per cent to Sh38.7 billion from Sh36.3 billion in 2017.

“..we decided to absorb the indirect taxes and that had an impact on our mobile data growth for the year...the 6.4 per cent growth we had on our mobile data would have been more like 9.5 per cent if we didn’t have to absorb this taxes,” Kamath said.

In October 2018, Safaricom announced it had increased the price of voice calls, data and SMS as it sought to pass on the increased tax to consumers.

The firm raised the cost of calls by 30 cents, and SMS by 10 cents, after the tax rose to 15 per cent, in addition to the prevailing 16 per cent Value Added Tax (VAT) on mobile service.

Despite the increased price for data, the number of mobile data customers increased to 18.8 million from 17.7 million in 2017.

Airtel and Telkom, Safaricom’s competitors in the industry also increased voice and data tariffs in conformity with the 15 per cent excise duty imposed on telephone and internet by the government.

According to the new State of the Mobile Report 2019 released early this year there are currently 197 different mobile bundle offers from telecommunications firms.

The bundles are consumed on in-bundle and out-of-bundle rates for as low as Sh2 per Mb to up to Sh10,000 for 40 gigabytes or Sh6,000 for 210 gigabytes for some service providers.

Last year, as the report shows Kenyans used over 269 million Gb of data across video, web browsing, music, communications, social networking, and other digital content, the data consumption is expected to cross one billion gigabytes by 2022.