Kenya: Airtel Money records Sh79m annual profit

Airtel Kenya’s mobile money business made a profit of Sh79 million in the year ended December 2020, sharply contrasting with the company’s voice division whose losses rose to Sh6 billion in the period.

The mobile money unit recorded revenue of Sh245 million in the period, the company’s financial results show, and although expenses were higher at Sh282.3 million, it was able to turn a profit due to finance income of Sh37.5 million and a foreign exchange gain of Sh80.1 million.

The firm does not operate the mobile money unit as a separate entity, but Central Bank of Kenya (CBK) rules requires telcos to show the results of the mobile money businesses.

The voice business recorded revenues of Sh26.45 billion in the period, with the unit’s loss after tax hitting Sh6.07 billion on the back of higher operating expenses and finance costs.

The profit of the Airtel Money unit, therefore, had only a marginal effect on the firm’s total loss, which stood at Sh5.99 billion in 2020.

Airtel’s mobile money business also trails that of Safaricom by a wide margin, reflecting the financial benefit of the large market share advantage enjoyed by the country’s leading telco.

Safaricom does not disclose the profit it makes from its mobile money platform M-Pesa but the figure runs into billions of shillings per annum, dwarfing Airtel Money’s earnings.

In the year ended March 2021, Safaricom reported revenue of Sh82.7 billion from M-Pesa, which represented 31.3 percent of the company’s total full-year sales of Sh264.03 billion.

M-Pesa has more than 90 percent share of the mobile money market, with its 34.06 million active mobile subscribers accounting for 98.5 percent of the industry total.

The platform offers a wide range of financial services including cash transfers, credit and payments, entrenching its hold on customers from the many use cases and network effect.

Rival Telkom Kenya in November last year sought to have Parliament compel Safaricom cut the fees it charges on its M-Pesa service for cash transfers to rival platforms, claiming that high charges for these transfers discourage cross-platform money transfers that would lift the other networks’ revenue performance.

Safaricom in its submissions defended itself against the accusations that it is using its outsize market power to the detriment of rivals, saying that there was healthy competition in the industry and that any player could build its market share through increased investments and innovation.