Safaricom, a unit of Vodacom Group, posted a 14% increase in net income for the six months to September 2019 as revenue growth from mobile money was hurt by a state crackdown on sports betting.
Growth of income from M-Pesa, Safaricom’s mobile-money product, was limited at 18% to 41.97-billion shillings (US$406.4-million) as the government tightened oversight over sports-betting companies, which rely on phone-based transactions for operations. M-Pesa accounts for 34% of revenue of Kenya’s biggest company.
Kenya cancelled 27 gaming licences this year, including those of online betting companies SportPesa and Betin, which account for 85% of the gaming market share, African Alliance Securities telecoms analyst Maureen Kirigua said in July.
“Excluding gaming, M-Pesa grew at a very impressive 20.9% year-on-year, which is more impressive than the 18.9% in the previous year,” chief financial officer Sateesh Kamath said.
While M-Pesa growth was held back, the performance was better than expected, according to Patrick Mumu, a research analyst at Nairobi-based Genghis Capital. Safaricom beat the investment bank’s estimate of 13% after income from a mobile overdraft facility introduced in January and mobile-banking products partly compensated for the contraction in betting.
Safaricom offers mobile banking services in partnership with NCBA Group and KCB Group, two of the nation’s three biggest lenders.
“The surprise is really the growth from the other M-Pesa income, the new business lines,” Mumu said.
The company reported 35.7-billion shillings in profit, compared to 31.2-billion shillings a year ago, as service revenue grew 5% to 124.3-billion shillings, slower than a year earlier. Earnings before interest and tax went up 13% to 49.8-billion shillings
Safaricom, which accounts for 51% of Nairobi Securities Exchange’s market value, climbed as much as 2.5% to 30.50 shillings, the highest in 18 months. The shares have gained 37% so far this year, compared to a 28% jump of the FTSE NSE 25-Share index. — Reported by Bella Genga, (c) 2019 Bloomberg LP