As Kenya's largest mobil operator Safaricom announced this week it would look to increase rural mobile penetration, it also reported its profits fell 13 percent as a result of increased expenses and revenue losses from voice calls as a result of recent price wars that has seen prices drop dramatically in recent months. According to the company's report, net income fell to 13.2 billion shillings ($151.7 million), through the past 12 months as reported through March. Safaricom CEO Bob Collymore said at a press conference in Nairobi that operating costs have skyrocketed 25 percent in the past year. The “key reason for the decline in profit was a 17 percent increase in the depreciation charge to 16.3 billion shillings because of increasing capital expenditure,” the company's CFO Chris Tiffin added. “We are also paying more for interconnection tariffs because there are more calls going out of our network.” The Kenyan telecom regulator last August cut interconnection rates in half in an effort to jumpstart what had become a stalled mobile market. The move led to a round of price wars that saw mobile operators slash their connection fees massively in an effort to increase subscribers. Safaricom, however, added that they are hopeful that increased investment in the rural areas of the country and developing infrastructure there will help buttress profits in the coming years and push for greater mobile penetration in the country. BM
