Safaricom’s Teams profit jumps over 1000%
Kenya worked with Etisalat of Emirates to set up Teams cable network to boost internet connectivity in the country and across East Africa. Safaricom is one of the several corporate investors in Teams.
Safaricom PLC (SCOM) made a profit of Ksh60.9 million from its stake in submarine cable firm The East African Marines Systems (Teams) in its financial year ended March 2020. The profit increased more than 1,070% from Ksh5.2 million in the financial year through March 2019, Safaricom’s annual report released recently shows.
Teams operates a 5,000-kilometre submarine cable system connecting East Africa through the port of Mombasa to the United Arab Emirates. In addition to Kenya, Uganda, Rwanda, Burundi and Tanzania rely on the Teams cable line for their global internet connectivity. Teams makes money from providing access to its submarine cable system.
Teams is a joint venture of multiple parties. Kenya teamed up with Emirates’ telecom operator Etisalat to set up the Teams cable. Therefore, Etisalat owns 15% stake in the business. On the Kenyan side, the government owns 20% stake in Teams and Safaricom has 32.5% stake in the business.
Other corporate shareholders in Teams are Telkom Kenya with 23% stake, Kenya Data Network with 10% stake, Wananchi Group with 6% stake and Jamii Telecom owns 5%. Jamii Telecom is the name behind Faiba broadband service. Access Kenya Group and BCS Group also own stakes of less than 2% each in Teams.
Besides the profit Safaricom may make from its Teams stake, Teams cable system is what underpins Safaricom’s mobile data or broadband business. As competition intensifies and growth slows in its core voice calls business, Safaricom is increasingly counting on its mobile money service Mpesa and broadband businesses to drive future growth.
The Mpesa business generated Ksh84.4 billion in revenue for Safaricom in the financial year through March 2020, marking an increase of 12.6% from the previous year. Mobile data revenue jumped 12% to Ksh40.7 billion in the financial year ended March 2020.
Finally, Safaricom shares fell 1.79% on Thursday (July 9) to close at Ksh27.50. Although Safaricom stock is down about 13% this year, it is still beating the market. The NSE All-Share Index is down 20.4% this year while the blue-chip NSE 20-Share Index is down 28% this year.