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Sports Betting in Kenya lifts Safaricom profits

11 May 2016, 22:51

Nairobi - Kenyans using mobile-money platform M-Pesa to bet on the outcome of sporting events helped Vodafone Plc’s unit in the East African country boost transaction volumes by 48 percent in the past year.

The service, offered by Safaricom Ltd. in East Africa’s biggest economy, is now transacting about 5 billion shillings ($50 million) day, Chief Executive Officer Bob Collymore, 57, said in an interview May 7 in the capital, Nairobi. M-Pesa, which means mobile money in the Swahili language, can now handle 900 transactions per second, compared with 320 previously, after Safaricom moved its servers to Kenya from Germany to improve efficiency, he said.

“We’re seeing tremendous growth,” Collymore said. “Sports betting is one which is using M-Pesa a lot and had we not done this we would have really struggled to meet capacity there. That sector has now absolutely overtaken everyone else.”

M-Pesa earned Safaricom, which is 40 percent owned by Vodafone Plc, about 32.6 billion shillings in the 12 months through March 2015, a fifth of total revenue. The company reports its latest full-year earnings on Wednesday. The platform has grown from 2 million users in the first year it was introduced in 2007, to more than 21 million, Collymore said. The number of transactions it handles equates to about a third of Kenya’s $61 billion gross domestic product, according to World Bank data.

Banking Services

Safaricom has used M-Pesa to roll out new services, including partnerships with more than 10 banks that enables businesses to transfer money from their mobile phones to their bank accounts. It’s also offered users the ability to reverse transactions within 20 seconds if they’ve sent funds to the wrong number.

Over the next 12 months, the company plans to begin introducing home broadband services to 12,000 homes in Nairobi by using Kenya Power Ltd. infrastructure to connect its fiber-optic cables to households, Collymore said. The use of the electricity utility’s pylons to connect consumers will help reduce data prices, he said.

Putting the fiber on Kenya Power’s poles is “a lot cheaper and a lot quicker,” Collymore said. “Because they are going to new cement poles, it makes it more robust because fiber gets dug up quite a bit. In a low-cost, low-revenue environment like this, it actually makes more sense.”

Kenya’s biggest company by market value currently has 3,200 kilometers (1,988 miles) of fiber reaching 7,000 homes in Nairobi and the port city of Mombasa. The company rolled out mobile 4G services in late 2014 through partnerships with Huawei Technologies Co. and Nokia OYJ and is still testing the service that offers speeds of up to 100 megabytes per second, Collymore said.

Safaricom’s shares were up 0.3 percent by 12:40 p.m. in Nairobi. They have climbed 4 percent so far this year to 16.95 shillings, giving the company a market capitalization of 679 billion shillings.

- Bloomberg


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