Safaricom Posts 55% Profit Surge as Ethiopian Market Losses Narrow Significantly

Safaricom, Kenya’s telecommunications giant and East Africa’s most valuable publicly listed company, has announced a remarkable 55% increase in its half-year profit, signaling a strong rebound in its core business and notable progress in its strategic expansion into Ethiopia. The company posted a group operating profit of 65.2 billion Kenyan shillings ($505.62 million) for the six months ending September 30, 2025, while maintaining its full-year guidance amid a challenging but improving regional economic environment.

The impressive profit growth comes as Safaricom’s ambitious Ethiopian venture begins showing signs of maturation. The telecom operator reported that its losses in Ethiopia dropped by a substantial 59% compared to the first half of the previous financial year, marking a critical turning point in what has been one of Africa’s most closely watched telecom market entries in recent years.

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Ethiopia: From Heavy Losses to Gradual Recovery

Safaricom’s Ethiopian operations, which launched in 2022, represent the company’s most significant international expansion to date. The entry into Ethiopia came as the government of Africa’s second most populous nation began opening its tightly-controlled economy to foreign competition, dismantling decades of state monopoly in the telecommunications sector. This liberalization created a rare opportunity for international operators to access a market of over 120 million people, most of whom lacked access to modern telecommunications services.

The Ethiopian venture has been capital-intensive and fraught with challenges. The previous financial year’s first half was particularly difficult, with losses heavily impacted by the depreciation of the Ethiopian birr currency. Currency volatility has been a persistent concern in Ethiopia, where foreign exchange shortages and economic instability have created operational headwinds for international businesses. The birr has faced significant pressure amid Ethiopia’s economic challenges, including the impacts of civil conflict, inflation, and structural economic reforms.

Despite these obstacles, the 59% reduction in losses suggests that Safaricom’s Ethiopian strategy is beginning to gain traction. The company has been investing heavily in network infrastructure, building out coverage across Ethiopian cities and rural areas, and working to convert a population largely unfamiliar with modern mobile services into active subscribers. The narrowing losses indicate that subscriber acquisition is accelerating and that the revenue base is beginning to offset some of the substantial operational costs.

Industry analysts view Safaricom’s Ethiopian performance as a critical test case for telecommunications liberalization in Africa. If successful, the venture could establish a blueprint for how regional telecom champions can expand beyond their home markets and drive digital transformation across the continent.

Kenya: The Reliable Profit Engine

While Ethiopia captures attention as the growth story, Safaricom’s home market of Kenya continues to be the bedrock of its profitability. Steady growth in the Kenyan business remained the main profit driver for the group, demonstrating the resilience and maturity of Safaricom’s domestic operations.

Kenya, with a population of approximately 54 million people, has one of Africa’s most developed telecommunications markets. Safaricom commands a dominant market share in Kenya, with the company serving tens of millions of subscribers across mobile voice, data, and financial services. This market leadership position allows Safaricom to generate consistent cash flows that fund both dividend payments to shareholders and investments in expansion markets like Ethiopia.

The Kenyan telecom market’s maturity means that growth comes primarily from increased data consumption, migration to higher-value service plans, and expansion of digital services rather than from subscriber acquisition. Kenyan consumers are increasingly sophisticated in their use of mobile services, with high smartphone penetration and strong adoption of mobile internet, social media, and digital content.

Safaricom has also benefited from Kenya’s relatively stable macroeconomic environment and strong regulatory framework. While Kenya faces its own economic challenges, including public debt concerns and occasional political uncertainty, the country’s business environment is generally regarded as among the most favorable in East Africa.

M-Pesa: The Financial Services Powerhouse

A standout performer in Safaricom’s results was M-Pesa, the mobile money platform that has become synonymous with financial inclusion in Kenya and beyond. Revenue from M-Pesa rose to 88.1 billion Kenyan shillings ($683 million) from 77.2 billion shillings in the previous year’s corresponding period, representing growth of over 14%.

M-Pesa’s performance is particularly noteworthy given that the platform is now a mature service in Kenya, having launched in 2007. The continued double-digit growth demonstrates M-Pesa’s ability to expand beyond basic money transfer services into a comprehensive financial services ecosystem encompassing savings, lending, insurance, and merchant payments.

The platform has evolved from a simple peer-to-peer money transfer service into a critical piece of Kenya’s financial infrastructure. Millions of Kenyans use M-Pesa daily for everything from paying utility bills to receiving salaries, purchasing goods, and accessing credit. The service has effectively banked the unbanked, providing financial services to populations that traditional banks struggled to reach.

M-Pesa’s success has made it a model studied by telecommunications companies, financial institutions, and development organizations worldwide. The platform demonstrates how mobile technology can leapfrog traditional banking infrastructure to deliver financial inclusion at scale. Mobile money services like M-Pesa have proliferated across Africa and other emerging markets, but few have achieved M-Pesa’s level of market penetration and cultural integration.

In Ethiopia, Safaricom has also launched M-Pesa services, viewing mobile financial services as a key differentiator in a market where the majority of the population lacks access to formal banking. Early indications suggest growing adoption, though the service is still in its early stages compared to its maturity in Kenya.

Group Performance and Revenue Growth

Safaricom’s overall group service revenue rose to 199.9 billion Kenyan shillings ($1.55 billion) in the six months ending September 2025, up from 179.9 billion shillings in the same period the previous year. This represents growth of approximately 11%, a solid performance that reflects strength across multiple service lines.

Service revenue—which excludes equipment sales and focuses on recurring revenue from telecommunications and digital services—is considered a key metric in the telecom industry. It provides insight into the health of a company’s core operations and its ability to generate sustainable cash flows.

The revenue growth was driven by multiple factors across Safaricom’s business segments. Mobile data services continued their upward trajectory as smartphone adoption increased and consumers used more data-intensive applications. Voice services, while mature, remained stable and continued generating significant revenue. Fixed broadband services for homes and businesses also contributed to growth, as Safaricom expanded its fiber network across urban Kenya.

Additionally, enterprise and business services represented a growing revenue stream. Safaricom provides telecommunications infrastructure, cloud services, Internet of Things (IoT) solutions, and other digital services to corporate clients, government agencies, and small businesses. This B2B segment offers higher margins than consumer services and represents a strategic growth area.

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Ownership Structure and Strategic Partnerships

Safaricom’s ownership structure reflects its position as a Pan-African telecommunications player with strong international partnerships. The company is partly owned by South Africa’s Vodacom Group, which holds a significant stake, and Britain’s Vodafone Group, one of the world’s largest mobile telecommunications companies.

This ownership arrangement provides Safaricom with several strategic advantages. It offers access to Vodafone’s global technology platforms, best practices in network operations, and expertise in launching and scaling mobile financial services. Vodafone’s experience with mobile money services globally, including its role in developing the original M-Pesa platform, has been particularly valuable.

Vodacom’s involvement provides regional connectivity and expertise in African markets. As one of Africa’s largest mobile operators with significant operations in South Africa, Tanzania, the Democratic Republic of Congo, Mozambique, and Lesotho, Vodacom brings a deep understanding of African market dynamics, regulatory environments, and consumer behaviors.

The Kenyan government also maintains a stake in Safaricom through the National Treasury, reflecting the company’s strategic importance to Kenya’s economy and digital transformation agenda. This government ownership has sometimes created political considerations around pricing, taxation, and regulatory matters, but it also ensures that Safaricom’s interests are broadly aligned with national development objectives.

Maintaining Full-Year Guidance: Confidence in Business Trajectory

Safaricom’s decision to maintain its full-year guidance signals management’s confidence in the business trajectory despite ongoing challenges in Ethiopia and broader economic uncertainties. Full-year guidance represents management’s projections for key financial metrics, and maintaining guidance after a strong first half suggests that the company expects continued solid performance.

This confidence is significant given the various headwinds facing telecommunications operators in the region. These include currency volatility, inflationary pressures that affect both costs and consumer purchasing power, regulatory changes, intense competition, and the ongoing need for massive capital investments in network infrastructure.

Maintaining guidance also suggests that Safaricom’s management has visibility into its business performance and confidence in its ability to execute its strategic plans. The company likely expects that Ethiopian losses will continue narrowing in the second half, that Kenyan operations will remain resilient, and that M-Pesa and other digital services will continue growing.

The Ethiopian Market: Long-Term Strategic Bet

Safaricom’s Ethiopian venture must be understood as a long-term strategic bet rather than a short-term profit play. Ethiopia represents one of the last major frontier telecommunications markets globally, with a massive population that has been historically underserved by modern communications infrastructure.

When Safaricom entered Ethiopia in 2022, the country had a single state-owned telecommunications provider, Ethio Telecom, which had struggled to provide adequate service quality or coverage. The government’s decision to license new private operators was driven by recognition that telecommunications infrastructure is critical to economic development and that competition would drive investment and service improvements.

Safaricom formed a consortium specifically for the Ethiopian market, bringing together international investors and partners with capital and expertise. The company won one of the new licenses through a competitive bidding process, committing to invest billions of dollars in network infrastructure over several years.

The Ethiopian market presents both enormous opportunities and significant challenges. On the opportunity side, the market size is substantial, with over 120 million people offering massive scale potential. Penetration rates for mobile services remain low compared to more developed markets, suggesting substantial room for subscriber growth. The country’s young population is eager for digital services, and the economy, despite current challenges, has significant long-term growth potential.

On the challenge side, Ethiopia’s infrastructure is underdeveloped, requiring massive capital investment to build network coverage. The security situation in some regions has complicated network rollout. Currency controls and foreign exchange shortages have made it difficult to repatriate profits and manage international payments. Regulatory uncertainty has at times created operational complexities. And competition with the established state operator and potentially other new entrants means market share must be won rather than assumed.

Regional Telecommunications Context

Safaricom’s results should be viewed within the broader context of Africa’s telecommunications sector, which has been a rare bright spot in the continent’s economic landscape. Mobile services have penetrated African markets at remarkable speed over the past two decades, connecting hundreds of millions of people who never had landline telephone access.

The GSMA, the global trade association for mobile network operators, reports that mobile technologies and services generated approximately 9% of Africa’s GDP in recent years and supported millions of jobs directly and indirectly. Mobile connectivity has enabled economic activity, improved access to information, facilitated financial inclusion, and created platforms for innovation across the continent.

However, Africa’s telecommunications markets face ongoing challenges. Revenue growth has slowed in many mature markets as penetration rates approach saturation. Data pricing remains under pressure from regulators concerned about affordability and from competitive dynamics. Operators face the need to invest heavily in 4G and 5G infrastructure while revenues per user remain relatively low. Currency volatility and economic instability in many markets create financial risks.

Despite these challenges, telecommunications remains one of Africa’s most attractive sectors for investment, with consistent cash flow generation, essential service status, and ongoing growth in data consumption. Companies like Safaricom that have established strong market positions and diversified into digital services beyond connectivity are particularly well-positioned.

Looking Ahead: Opportunities and Risks

As Safaricom looks to the second half of its financial year and beyond, several key factors will determine its continued success. In Ethiopia, the crucial questions are how quickly the company can achieve profitability, what market share it can capture, and whether the regulatory and economic environment stabilizes. Success in Ethiopia would validate the expansion strategy and potentially open opportunities in other markets.

In Kenya, maintaining revenue growth in a mature market requires continuous innovation in services, network quality improvements, and expansion into adjacent digital services. M-Pesa’s continued evolution into a full financial services platform presents significant opportunities, though it also brings increased regulatory scrutiny and competition from banks and fintech companies.

The company must also navigate regulatory relationships in both countries. Telecommunications regulators across Africa have become increasingly assertive about issues like pricing, quality of service, competition, and tax compliance. Managing these relationships while protecting shareholder interests requires diplomatic skill and responsiveness to policy concerns.

Technology evolution presents both opportunities and challenges. The rollout of 5G networks could enable new services and revenue streams but requires substantial capital investment. Artificial intelligence and automation could improve operational efficiency but also requires significant technology investments. Cybersecurity threats are growing, requiring continuous investment in security infrastructure and capabilities.

Conclusion: Strong Position, Challenging Road Ahead

Safaricom’s 55% profit increase and maintained full-year guidance represent strong execution on its strategic vision. The company has demonstrated that it can continue growing its mature Kenyan business while investing for the future in Ethiopia. The narrowing Ethiopian losses suggest that the high-risk, high-reward expansion bet may eventually pay off.

For investors in Vodafone and Vodacom, Safaricom’s performance provides reassurance that their East African assets are creating value. For the Kenyan government, Safaricom’s success reinforces the importance of the company to the national economy through tax revenues, employment, and digital infrastructure provision.

For African telecommunications more broadly, Safaricom’s results demonstrate that well-managed operators with diversified service portfolios can continue generating attractive returns even in challenging markets. The company’s M-Pesa platform, in particular, shows how telecommunications companies can evolve beyond connectivity into platform businesses that enable broader digital ecosystems.

As Safaricom continues executing its strategy, its performance will serve as a bellwether for African telecommunications. Success in Ethiopia could catalyze further cross-border expansion and demonstrate that frontier markets can generate returns that justify the risks. Continued strength in Kenya would reinforce the value of dominant market positions and first-mover advantages in mobile financial services.

The road ahead remains challenging, with macroeconomic uncertainties, competitive pressures, and the need for continued capital investment. However, Safaricom’s first-half results suggest that the company has the strategic vision, operational capabilities, and financial resources to navigate these challenges and continue its growth trajectory. For a continent hungry for digital connectivity and financial inclusion, Safaricom’s success story offers both inspiration and practical lessons in how telecommunications can drive economic transformation.

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By: Montel Kamau

Serrari Financial Analyst

7th November, 2025