(MENAFN- The Arabian Post)

Kenya's leading telecommunications provider, Safaricom, has announced a significant 55 per cent increase in its half-year profits for 2025, driven by robust growth in data services and mobile transactions. The company, which holds a dominant position in East Africa's telecom market, has seen a notable recovery in its performance following challenges in its Ethiopian venture.

The surge in profits comes as Safaricom has navigated through the hurdles posed by its operations in Ethiopia, which had been a significant strain on its balance sheet since the company launched services in the country. Despite the early struggles in Ethiopia, where it faced fierce competition, regulatory hurdles, and higher-than-expected costs, Safaricom has managed to taper its losses, which analysts had feared would undermine its overall performance.

For the first half of 2025, Safaricom's revenue from mobile data, M-Pesa mobile money services, and its expanding 5G network were the primary drivers behind the profit increase. The firm's M-Pesa service, which has long been a cornerstone of its business model, saw substantial growth in transaction volumes, particularly in cross-border payments, which has contributed to its strong financial performance. With the growing adoption of mobile money services in Kenya and across the region, Safaricom's role as a digital payment powerhouse has strengthened, especially in underserved areas.

The company's data services have also continued to experience substantial growth, with Safaricom reporting a boost in mobile internet penetration, as more customers in Kenya embrace digital services. As mobile broadband becomes increasingly accessible, Safaricom has capitalised on its leadership in 4G and expanding 5G infrastructure, catering to a more data-hungry consumer base.

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In Ethiopia, however, Safaricom's entry into the market through its local subsidiary, Safaricom Ethiopia, has faced challenges. The market in Ethiopia, with over 110 million people, is considered one of the last untapped telecom frontiers in Africa. However, Safaricom has struggled to make a significant profit as the company battles competitors like Ethio Telecom, the state-owned monopoly, which still controls a large share of the market. Operational costs in Ethiopia, along with regulatory delays and local market conditions, initially dampened Safaricom's ambitions.

Despite these challenges, Safaricom has made significant investments to grow its presence in Ethiopia, including expanding its network coverage and improving service reliability. Its market share in Ethiopia has been steadily increasing, and the company has expressed confidence in the long-term potential of the market. The company's Ethiopia arm continues to tap into the market's growing demand for mobile services, aiming to become a key player in the region's digital transformation.

The improvement in Safaricom's performance is also attributed to the company's ongoing investment in expanding its infrastructure, both in Kenya and Ethiopia. The telecommunications giant has bolstered its fibre optic network and expanded 5G services in key urban areas, contributing to higher revenue from both individual and enterprise customers. With a shift towards more premium services, such as 5G, Safaricom is positioning itself as a leader in the next wave of telecom technology in the region.

The company's strong performance has been further supported by the wider growth in East Africa's economy, with increased consumer spending and a surge in demand for internet services, mobile banking, and digital entertainment. The region's economic recovery post-pandemic has also played a role in boosting Safaricom's fortunes, with more people adopting technology-driven solutions for everyday activities.

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Despite the strong growth in data and mobile services, Safaricom faces ongoing challenges, particularly regarding its expansion into new markets like Ethiopia. While it has successfully leveraged its local brand reputation and expertise, the regulatory and competitive landscape in Ethiopia remains uncertain. The company's ongoing efforts to navigate these hurdles will determine how quickly it can break even in the country and achieve sustainable growth.

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