Safaricom misses profit forecast on Ethiopia costs

Vodacom affiliate Safaricom reported lower than expected annual profit as the Kenyan telecommunications giant’s unit in neighbouring Ethiopia booked losses in its first full year of operations.

Net income grew 1.2% to KSh63-billion (R8.9-billion) in the year to March, the company said on Thursday in the capital, Nairobi. That was less than the KSh67.6-billion forecast by analysts.

“Ethiopia is at an investment phase and such a big greenfield with large investments is expected to have losses,” chief financial officer Dilip Pal said at an investor briefing, as he hailed the company’s domestic performance. “Kenya’s performance is extraordinary.”

Ethiopia is at an investment phase and such a big greenfield with large investments is expected to have losses

Ethiopia’s annual operating loss was KSh45-billion, according to CEO Peter Ndegwa. In the current financial year, this is seen in a range between KSh43-billion and KSh46-billion.

Safaricom expects the group’s full-year operating profit to jump as much as 15% to KSh109-billion in the current financial year.

“The worst is behind us from a group financial point of view,” Pal said.