Safaricom ? 56% Growth in M-PESA Revenue

Thursday, June 2, 2011

Last week, Safaricom announced its annual results[1]. It has confirmed an increased turnover (+12.9% to Ksh. 94.83bn). However, after several years of sustained growth, Safaricom experienced a 12.4% drop in profits before tax due to increased competition.

Nevertheless, a more interesting figure to highlight is the 56% growth in M-PESA revenue for the year 2011. With almost 14 million of users representing 81% of Safaricom’s customer base in Kenya, M-PESA now accounts for 12.4% of its total revenues, offsetting its decline in voice revenues. In addition, M-PESA ARPU increased by 2.7% (whereas blended ARPU across voice, data, SMS, has gone down). With a 50% year over year increase in M-PESA revenue and customer numbers, Safaricom’s mobile money service has undoubtedly become a corner stone of the company’s strategy, as CEO Bob Collymore explains: “Our strategy to continually invest in all areas of our network to deliver on our customer needs, driving M-PESA to grow financial inclusion and democratising data and internet to bridge the digital divide have delivered very strong growth”.

Looking at the broader picture, with monthly ARPU as low as $5.4 compared to a $9.8 average in Africa[2], and a very competitive telecom market, Kenya offers an interesting glimpse of what might happen in other countries in the region, as a result of increased competition and a customer base which is gradually taking in more members from the bottom of the pyramid who tend to exhibit lower ARPU.

Historically, monthly ARPU in the region has been considerably higher than in India and South-East Asia[3]. Consequently, operators have built their growth on high average revenue per minute (ARPM) while the monthly minutes of use (MOU) per subscriber have been low[4]. However, in order to sustain growth, African operators have had to widen their customer base which is only possible through lower voice tariffs, which is the situation currently experienced in Kenya.

As a result, it seems that African operators will have to develop new value-added services for their customers if they want to sustain their growth. From that perspective, Mobile money has become a clear competitive advantage for operators in developing countries. Given the latest results from M-PESA, it seems that Safaricom is in strong position to face the challenges of this fast evolving telecommunications market.

[1] Full report available at

[2] Wireless Intelligence, Data for2010. Q4

[3] India’s ARPU for the fourth quarter of 2010 was $2.58, Bangladesh’s was $2,06, Indonesia’s was $3.03.

[4] Mastering the $4 ARPU Challenge: A Tale of India and Sub-Saharan Africa, Olivier Wyman

Source: (link opens in a new window)