Increased tariffs could raise Safaricom profits

Safaricom Limited has made a move to raise its calling charges in Kenya, that could see an increase in its second half performance.

The company recorded a drop in their net profit for the six months to September of 47.4% to stand at Sh4-billion ($47-million). This was caused by various factors such as an increase in operating costs that were hugely influenced by the weakening shilling and a general decline in revenue brought in from voice calls.

As a counter, this has lead to Safaricom increasing its tariffs by an average of 25%. The move as commented on by analysts is expected to lift its second half performance.

Eric Musau, an analyst at Standard Investment Bank commented “The increase in tariffs will not completely reverse the drop but we expect to see the drop come down to between 20 and 15 per cent.”

Gregory Waweru, an analyst at Kestrel Capital commented on the issue saying, “We expect a range of between 18 and 23 per cent in the drop in profits which is an improvement from the first half year drop of 47.4% since earnings in the second half are more favourable,” said.

Communication Commission of Kenya (CCK) places Safaricom market share at 77.86% in the quarter to December from 88.27 per cent in the 3 months to September.

Michelle Tongo