By Duncan Miriri
NAIROBI (Reuters) -Kenyan telecoms operator Safaricom’s core earnings fell by a fifth in the year to March 31, hit by the cost of starting operations in Ethiopia, it said on Thursday.
The group, which is part owned by South Africa’s Vodacom and Britain’s Vodafone, launched its Ethiopia network last year, betting that the populous nation will power growth after about five years of investment.
It has already signed up 2 million active users in Ethiopia, Group CEO Peter Ndegwa told an investor briefing, and it has also been awarded a mobile financial services licence after paying a fee of $150 million.
“The Ethiopia opportunity cannot be understated,” he said, adding that Safaricom will start offering financial services in the quarter starting next month.
Safaricom’s earnings before interest and tax were 84.99 billion shillings ($622.6 million) in the year to March 31, down 22% from the previous year.
It expects core earnings to come in at 75 billion to 81 billion shillings this financial year, Ndegwa said, as the rollout costs of the Ethiopia network continue to take a toll.
Service revenue rose 5%, the company said, driven by robust growth in its M-Pesa mobile financial services business and revenue from the provision of broadband internet to customers.
It will focus on emerging areas of fast growth, Ndegwa said, including the so-called internet of things and cloud computing. Both lines posted rapid growth but on low volumes.
The company proposed to pay shareholders a final dividend of 0.62 shillings per share, said finance chief Dilip Pal, bringing the total for the year to 1.20 shillings.
Shares in the company slid more than 3% to 14.80 shillings.
The shares have lost more than a third of their value this year owing to changes in global valuations of financial technology firms as well as broader volatility in global financial markets and a dollar shortage in Kenya that made it difficult for foreigners to repatriate dividends.
($1=136.5000 Kenyan shillings)
(Reporting by Duncan MiririEditing by David Goodman)
