Safaricom Feels the Pinch as Revenue Attributed to Betting Firms Reduces

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Safaricom, Betin

Halt in operation of some betting companies led to a slow down in growth in mobile money transfers in the economy.

In the new half-year results for Safaricom PLC for the period ending September 30, the telecommunication company reported a 15.5 per cent decline in payments made through the gaming industry.

And even though the firm registered M-PESA revenues growth by 20.9 per cent in the six months excluding gaming, compared to 19.1 per cent posted last year, Safaricom chief finance officer Sateesh Kamath said the result led to subdued growth in the total payments made through the mobile money service.

“Payments growth of 11 per cent was subdued by the slowdown in gaming. On a normalized basis growth was 24 per cent year on year,” Kamath said.

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Other payments made through customer-to-business transactions grew by 30.6 per cent, business-to-customer payments grew by 4.9 per cent, Lipa na Mpesa grew by 21.3 per cent.

Business-to-business grew by 3.2 per cent while international money transfer including PayPal and Alipay grew by 44.6 per cent.

The decline in transactions is been tied to long disputes between some betting companies and the Kenya Revenue Authority and Betting Control and Licensing Board (BCLB) since July.

In July, BCLB revoked the licences of 13 casinos, six lotteries and eight betting firms following a directive requiring the firms to clear withholding tax on winnings owed to government from the ended previous financial year.

The firms also saw their M-Pesa pay bills and SMS short codes withdrawn in early July even as Sportpesa disputed KRA’s substantive tax claim.

On 19 September, the Kenyan Parliament’s Finance Committee also proposed a new 20 per cent excise tax rate on betting stakes in the 2019/20 budget, an increase from the 10 per cent stake.

The proposal included in Finance Bill 2019 was later voted by the Parliament on September 25.

Firms such as SportPPesa and Betin has since closed their operations. SportPesa betting company that controlled close to 60 per cent of the market share said it would resume operations when the country puts in place “adequate taxation and non-hostile regulatory environment.”

However, their closure has not downcasted MPESA growth, at lease at the moment, which also saw a 7.8 per cent increase in the average number of chargeable transactions from 12.1 to 13 per customer per month.

Excluding gaming, the number increased by 17.5 per cent 9.3 to 10.9.

M-PESA customers active in a month grew by 12.4 per cent to 23.6 million year on year.

The mobile money transfer service still led the market registering 486.31 million out of 591.15 million commerce transactions carried between April to June.

Communications Authority’s statistical report for Q4 financial year 2018/2029, showed Airtel Money registered 3.08 million while T-Kash with 638,589 mobile commerce transactions.

Person-to-person were valued at Sh642.20 billion, Sh1.28 billion and Sh104.00 million respectively, out total Sh770.96 billion worth of transfers over the period .

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