Mobile money transfer service M-Pesa has emerged as one of Kenyan operator Safaricom’s key income generating businesses as per the 2011/2012 financial results the company announced on Thursday.
Introduced five years ago as a value-add service, M-Pesa has transformed into one of the mobile operator’s most popular products locking in customers in a highly competitive market.
Competition in the voice market that has led to low cost calls has forced the Kenyan telecommunications giant to shift its focus to non-voice services like data and M-Pesa.
Collymore said M-Pesa is a key driver of the company’s revenue growth and that it would continue to improve access to the service, which now directly employs 50,000 people. He hailed his predecessor, Michael Joseph, for introducing the revolutionary product that is expected to play a critical role on Safaricom’s profits and customer retention tactics in the next few years.
Safaricom’s total revenue for the year 2011 grew by 12.8% to Ksh.107 billion (US1.3 billion), with M-Pesa, data and voice services being the biggest contributors. Non-voice services represented 29% of the total revenue.
Notably, revenue from M-Pesa increased by 43% to Ksh.16.9 billion ($203 million) representing half of the company’s non-tariff revenues. Safaricom has in the last one year made investments towards improving the money transfer’s network and growing its user base.
Safaricom now has nearly 40,000 M-Pesa agents after it increased the number last year by nearly 46%. The company’s rich agent network across the country has given M-Pesa a competitive edge amidst competition from five other mobile money transfer services operating in Kenya.
The registered number of M-Pesa customers grew by 6% to 14.9 million representing 78% of Safaricom’s entire 19 million customer base. M-Pesa now extends beyond money transfer to payment of bills, salaries, and management of bank accounts thanks to Safaricom’s partnership with other institutions.
Data, another key area of growth, posted revenue growth of 23% to Ksh.6.6 billion ($79 million). The distinct number of internet users increased by 31% to 4.6 million. This growth was supported by increased penetration of data enabled phones with just over 400,000 smart phones in use on the Safaricom network.
“Internet usage growth was largely driven by aggressive device sales, availability of local content to our customers and targeted tariffs geared to various customer segments,” said Collymore.
Over 75% of the market uses Safaricom connected mobile devices to access the internet, making the mobile operator the market leader.
“To this end we will commence the build out of our own fibre network over the next four years to augment the current dark fibre capacity we lease from various providers. We also intend to be the provider of choice as an integrated solutions provider for our enterprise customers,” said Collymore outlining the firm’s 2012/2013 strategy.
According to Collymore the company was affected by 2011’s tough economic environment characterised by low voice tariffs, intense inflationary pressure, high borrowing costs and foreign exchange fluctuations. Safaricom forecast low to mid-single digit percentage growth in total revenues for 2012/2013.