Kenya’s biggest telecoms operator, Safaricom, lowered its full-year earnings guidance on Thursday, after reporting a sharp fall in net income due to the depreciation of Ethiopia’s birr currency.
The company won the first licence to operate in Africa’s second most populous country, with about 120 million people, in 2022, following the liberalisation of the sector.
Despite strong customer growth, it has had a bumpy ride so far due to security, inflation and currency challenges.
Safaricom said the group’s half-year earnings before interest and taxes (EBIT) grew 31.9% year-on-year, but expected full-year earnings to ease to 94 billion to 100 billion Kenyan shillings ($731 million to $778 million) from 103 billion to 109 billion previously.
The company, partially owned by South Africa’s Vodacom and Britain’s Vodafone, posted a 14.0% increase in group service revenue to 181.4 billion shillings for the period to the end of September.
However, the group’s net income fell 17.7% on the year, dented by a depreciation of 106% in Ethiopia’s birr currency, an effect of the government’s free float of the unit, said Peter Ndegwa, Safaricom’s group chief executive officer.
“Despite the short-term challenges, we remain confident in the long-term commercial success of our Ethiopian business, and we are very encouraged by the commercial acceleration,” Ndegwa said.
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