* Pretax profit up 32.7 percent to 21.1 bln shillings
* Growth in data and financial services offset voice
* Maintains free cash flow guidance for the year (Adds revenue, full-year guidance, analyst, executives’ comments)
By Duncan Miriri
NAIROBI, Nov 4 (Reuters) - Kenya’s Safaricom said first-half pretax profit rose by almost a third, due to growth in financial services and data usage, offsetting sluggish voice revenues.
Safaricom, which is 40 percent owned by Britain’s Vodafone , said on Tuesday pretax profit rose to 21.1 billion shillings ($235.8 million) in the half-year to end-September.
“We did see in the first-half lower voice growth than expectations but offset by other product growth,” John Tombleson, the firm’s chief financial officer told Reuters.
Revenue from calls, which makes up more than half of the total, grew by just 6 percent during the period, partly due to the fallout from attacks blamed on Islamists, which has hit tourism in the country.
“If the tourists aren’t coming that means the hotels are not doing well. That means that the people who supply the hotels; the fisherman, the bean grower, the chicken farmer, aren’t getting paid therefore they can’t make calls,” Tombleson said.
The sluggish calls growth was offset by double-digit revenue growth across Safaricom’s mobile phone-based financial service, known as M-Pesa, short messaging services and Internet access on the back of increased usage.
Data and M-pesa account for 40 percent of revenues.
The company also benefited from a 4.95 percent increase in its customer base to 21.85 million subscribers in the period.
“The driver is the one million youths who have become adults and then they find they start needing a mobile telephone,” Tombleson said.
Earnings before interest, taxation, depreciation and amortisation (EBITDA), a key measure for telecoms, rose 16.2 percent to 33.5 billion shillings, leading to an EBITDA margin of 42 percent, around the top of the range for global telecoms.
It maintained free cash flow guidance of 25-26.5 billion shillings for its full year.
Safaricom is spending 32 billion shillings this financial year, up from 27 billion shillings last year, mainly due to the roll-out of a fourth generation (4G) data network.
It is also acquiring the assets of some of Essar Telecom’s Yu, in a deal that was granted final regulatory approval on Tuesday, mainly to plug the quality of its network with additional spectrum.
Safaricom has been struggling with dropped calls and other network issues due to congestion on the network and unavailability of additional spectrum.
“Now we can see the light. We just got the Essar spectrum. We have got the money to spend so we know how we will fix that,” Chief Executive Bob Collymore told Reuters.
Analysts said Safaricom’s first-half financial results had exceeded their expectations.
“Our estimates were 0.72 shillings for the year but with these numbers they could be at 0.76 for the full year,” said Eric Musau of Standard Investment Bank, said, referring to Safaricom’s earnings per share.
Earnings per share rose by close to a third to 0.37 shillings in the first six months.
Safaricom’s shares, among the most active on the bourse, closed unchanged at 12.20 shillings per share, before the results were released.
1 US dollar = 89.5000 Kenyan shilling Editing by Jane Merriman