Giant telco operator Safaricom expects to lose a total of Ksh.19 billion from its mobile-money service M-Pesa following the waiver of fees on transactions below Ksh.1000.
The company has already tabulated its losses in three months from March through June at Ksh.6.5 billion following the waiver aimed at supporting cashless transactions amidst the Covid-19 pandemic.
“The total value of our contribution to the fight against this pandemic currently stands at Ksh.6.5 billion and continues to grow everyday. We estimate the impact on M-Pesa payment support will increase to about Ksh.19 billion by the end of the year,” outgoing Chairman Nicholas Ng’ang’a told shareholders on Thursday.
The Ksh.19 billion will represent a significant hit to earnings from M-Pesa which currently represents Safaricom’s cash cow.
Revenues from the mobile-money service totalled Ksh.84.4 billion in the year ending March 31 2020 meaning the operator is bound to lose atleast 1/5 or 22.5 percent of M-Pesa earnings in the current financial year.
M-Pesa ranks second in Safaricom’s service revenue profile having represented 33.6 percent of the telco earnings last year behind only voice at 34.5 percent.
The service has further been crippling up on voice earnings as it threatens to overthrow calls as Safaricom’s top earner with its contribution growing from 27 percent three years ago while voice has fallen from a higher share of 42.5 percent across the same period.
Mobile-money transfers have represented the platforms second highest growth rate after new business having improved by 5.3 percent points from last year.
The value of M-Pesa transactions was meanwhile estimated at Ksh.13.9 trillion while volumes totalled to 8.9 billion in the period.
M-Pesa customers undertook an average of 12.9 chargeable transactions per customer per month while 30-day active tills stood at 173,000-the same number as M-Pesa Agents across the country.
Free mobile-money transactions for amounts below Ksh.1000 first run to June 30 before being extended to December 31, 2020.Central Bank of Kenya (CBK) Governor Dr. Patrick Njoroge refused to be dragged into a public debate on the impact of free transactions on telco bottom lines even as observers and analysts sighted a significant earnings hit to mobile-money operators.Video Of The Day: | BULLDOZERS FOR SANITIZERS | Families remain in the cold after evictions from Kariobangi sewage estate