Safaricom hits record Sh99.7b profit as M-Pesa drives growth

Safaricom Kenya has reported record annual profits of Sh99.7 billion, cementing its position as East Africa's telecom and financial services powerhouse. The landmark result underscores the transformative role of M-Pesa, the mobile money platform that continues to redefine Kenya's fintech landscape and attract regional and global investor attention.

## How dominant is M-Pesa in Safaricom's revenue engine?

M-Pesa's contribution to total revenue growth reached 59.2 percent in the reporting period, while the platform now accounts for 45.6 percent of Safaricom's overall revenue mix. This structural shift reflects a fundamental rebalancing away from traditional voice and SMS services toward digital financial services—a trend that mirrors broader African telecom-to-fintech pivots. For investors monitoring African payment ecosystems, this metric signals sustained demand for digital wallets, merchant services, and cross-border remittances across East Africa.

The telecom operator's diversification into financial services has proven resilient against market saturation in voice revenue. M-Pesa processes millions of daily transactions, from peer-to-peer transfers to bill payments and merchant settlements, making it the de facto financial infrastructure for Kenya's informal economy—a segment representing over 40 percent of GDP.

## What market dynamics are driving M-Pesa's growth?

Several factors compound M-Pesa's expansion. First, Kenya's banked population remains concentrated among high-income earners; M-Pesa fills the void for the unbanked and underbanked majority. Second, cross-border remittance corridors have matured; diaspora inflows to East Africa exceed $3 billion annually, with M-Pesa capturing significant share through partnerships with Western Union and MoneyGram. Third, merchant adoption accelerated post-pandemic, with SMEs integrating M-Pesa payment rails into retail and e-commerce operations.

Safaricom's profitability surge also reflects operational leverage—incremental M-Pesa transactions carry high gross margins since the platform leverages existing telecom infrastructure. This structural advantage compounds as transaction volumes scale.

## What are the investment implications for African fintech?

Safaricom's record earnings validate a thesis that African telecom operators can monetize financial services at scale without cannibalizing core telecom margins. Investors in African fintech must recognize that incumbent telecoms (Safaricom, MTN Group, Vodacom) control distribution networks that pure-play fintechs cannot replicate. Safaricom's success suggests fintech startups focused on underserved verticals—invoice financing, insurance, savings—may face headwinds if they depend on M-Pesa distribution rather than building proprietary customer bases.

Regulatory tailwinds also matter. Kenya's Central Bank has progressively liberalized mobile money regulations, allowing non-bank fintech to compete directly with banks on lending and savings products. Safaricom's expansion into credit (Fuliza overdraft product) and insurance bundles demonstrates how integrated platforms capture wallet share across adjacent verticals.

For equity investors, Safaricom's valuation multiple reflects both telecom stability and fintech growth optionality. The stock trades at a premium to regional telecoms, justified by M-Pesa's consistent double-digit annual growth and market leadership in an economy where digital payments adoption now exceeds 70 percent of the adult population.

The record profit is not merely a financial milestone—it is evidence that African fintech infrastructure, when controlled by well-capitalized incumbents, can scale profitably while extending financial inclusion to hundreds of millions of people.

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