Telecoms operator Safaricom Plc on Thursday reported a 67 percent increase in full-year net profit, supported by momentum in its Kenya business, and significant loss reduction in Ethiopia.
Chief finance officer Dilip Pal spoke with the Business Daily on the operator’s outlook for the next financial cycle, including strategies to keep up growth in Kenya and walking the final miles to profitability in the neighbouring country.
What will it take to sustain the strong double-digit growth momentum for your next financial cycle?
If you look at the quality of growth, that's what I think is important here. From a Kenyan business standpoint, the top-line growth is what I describe as the quality of growth needed, and this is pretty much in line with our medium-term outlook.
For the connectivity business we expect to grow in the high single-digits, driven by momentum in mobile data, and that's visible. Within mobile data, over 30 million customers are on 4G devices, but only half of them use 1GB plus in a month. So, there are a lot of customers who are not using as much as they would. I think that's the job to be done.
Coming to the fixed service, we are making investments as we see it as a relatively new business. We don't consider this as a mature business yet, not only in terms of customer acquisition, but also in terms of the customer experience. There is a lot to be done in this area. We are recruiting more customers, and that's reflected in the growth momentum.
That's what gives us the confidence that fixed business will grow. Now we are topping it up with the fixed wireless. By combining fibre and fixed wireless, we think we can grow there.
For M-Pesa, we are adding more services, and we always say that don't look at each service as a separate line of revenue. Always look at it from impact on the overall ecosystem, and that's been the story. We are adding more services and that is now allowing the ecosystem to expand.
Are you concerned that a potential economic slowdown from the impact of the US-Israel war on Iran might slowdown this momentum?
Although the headline economic numbers look quite stable, there is an underlying issue on consumer spending and that could show up. It’s something to always watch out for, and the way we try to manage that is to look at the most vulnerable segment of customers. So, it's not about having one offer for everyone, or one thing for everyone.
You look at what makes sense for a set of customers, and then you try to address their concerns. So, we segment our customers in a way that we can react when some of the concerns impact a specific segment of customers. I think that's how we would approach shocks from a pricing standpoint.
You have been piloting WIFI tokenisation, tell us more about how that is going?
We do believe that in the true spirit of inclusion, we cannot leave any segment out, because we want to impact all the consumer segments and address affordability. On the mobile data side, at any time of the hour or day, we are offering something.
We now need something for Wi-Fi. Tokenisation to help consumers to purchase Wi-Fi in the moment and use it rather than committing to a monthly or weekly plan. I think that's the beauty of tokenisation. The initial response seems encouraging, but it's still a pilot.
You have been seeking partnerships for growth including eyeing collaboration with Elon Musk’s Starlink, how far has that gotten?
There are two areas that we have progressed on. One is on the transmission side, which is technically replacing connections that we have in most remote areas with Starlink connections.
This is progressing well. The other is the enterprise offer for the dish they sell. We are seeking to become the partner in enabling sales to customers. We have now signed the agreement, but then there are still regulatory processes which Starlink needs to conclude.
We have not yet gone to the market, but at the back end, we have completed everything. We're waiting for regulatory clearance to ensure that we can launch it soon.
Are you still maintaining the breakeven date for Safaricom Ethiopia at March of 2027?
The breakeven projected is on earnings before interest, taxes, depreciation and amortisation (EBITDA).
If you look at the second half of FY26 (October 2025-March 2026) the loss reduction is greater than in the first half and it shows that we are geared for positive EBITDA breakeven in FY 27 (March 2027).
When should the market expect the issuance of your second tranche green bond?
Right now, we are not saying it's coming in the next few months. I think we'll come back at some point in time and go to the market. Right now, I think we're quite comfortable.
It's not something that will happen soon. Remember it's a three-year plan. We are deploying the first Sh20 billion tranche now and then at some point in time, we’ll come back and issue the second tranche but there is no definitive timeline.
You have recently secured a 25-year license renewal to operate, what is the significance of this?
It's an operating license renewal along with all the spectrum licenses. All the spectrum licenses have been renewed for 25 years from the same date as the operating license extension. This is well harmonised as it means that we don't have to go after the operating license and spectrum licenses renewals separately.
