Kenya’s largest telco, Safaricom Limited has projected an estimated Sh5.5 billion ($51.64 million) loss from its revenue that comes from its mobile money platform M-Pesa.
The foregone revenue, which is 7.3pc of the mobile money platform’s annual earnings, will be caused by the telco’s move to remove all charges on small peer-to-peer transfers to facilitate cashless payments to help to contain the coronavirus pandemic. This is set to make the network provider feel the pinch in the next three months from mid-march.
New Chief Executive Officer Peter Ndegwa, who took the helm on April 1, however, is not worried about these losses, the optimistic man says this is just a hiccup. “When Kenya gets back on track, our business should get back on track,” he told Reuters. “We are in a good place to be able to weather this storm, but our business is linked to how the country comes out on the other side.”
Kenya has 270 confirmed cases of COVID-19 and as part of the government’s plan to help stop the curve, Kenyans have been advised to use paperless money and asked telcos to lower their charges.
Under an initial 90-day deal with the government, all charges for cash transfers of less than Sh1,000 have been removed by all operators.
M-Pesa, which was launched by Safaricom in 2007, is one of the most popular modes of payments in Kenya. The platform is used to send money, save, borrow and make payments for goods and services.
Ndegwa also says he is optimistic that the use of mobile money will bring in profit but says that it is yet to be seen. “We are not factoring in any upside until we see how customers cope with this crisis,” he said.
Safaricom has also experienced a surge in data traffic as people work from home and students turn to e-learning services. To assist with this, the telco has doubled Internet speeds for its fiber customers currently in the process of accelerating the installation of new fiber connections to meet the unbelievably fast-growing demand.
Ndegwa, who was Diageo’s managing director for continental Europe before taking his new role, said the coronavirus crisis will present new opportunities in the data business, which Safaricom needs to pick up the slack from declining volumes in traditional mobile telephony.
“People are discovering they can work from home. Education and learning will change. Small businesses are going to learn they can digitize their operations and operate more smartly,” The CEO stated.
