Par Value: 0.05/-
Closing Price: 11.95
Total Shares Issued: 40044601000.00
Market Capitalization: 478,532,981,950
First Half Earnings for the Period ended 30 September 2013
FY Revenue 144.67b versus 124.29b +16.4%
FY Voice Revenue 86.3b versus 77.33b +11.6%
FY Messaging Revenue 13.62b versus 10.15b +34.19%
FY Mobile Data Revenue 9.31b versus 6.62b +40.63%
FY Fixed Service Revenue 2.57b versus 2.11b +21.8%
FY M-Pesa Revenue 26.56b versus 21.84b +21.61%
FY Direct Costs [51.96b] versus [[47.17b] +10.15%
FY EBITDA 60.94b versus 49.24b
FY PAT 23.02b versus 17.54b +31.24%
FY EPS 0.57 versus 0.44 +29.55%
FY Dividend 0.47 versus 0.31 +51.61%
Dividend Yield 3.65%
Free Cash Flow 22.69b versus 14.51b
Strong growth of 28% in non-voice service revenue, now 36% of total revenue
• 11.1% growth in customer base to 21.6m customers (19.4m in FY13)
• Voice service revenue growth of 11.6% and non-voice service revenue growth of 27.8%
• Average blended rate per minute is Kshs 2.88 for national outgoing calls*
• 2.6% increase in outbound (on/off net)calling time to 98.2 minutes per customer per month
• 9.0% decrease in inbound calling time to 12.8 minutes per customer per month
SAFARICOM LIMITED ANNOUNCES AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2014.
Solid growth in all revenue streams with continued significance of non-voice revenue in revenue generation
Total revenue increased by 16% to Kshs 144.7bn.
Service revenue growth of 17% to Kshs 138.4bn of which – Voice service revenue grew by 12% to
Kshs 86.3bn and Non-voice service revenue increased by 28% to Kshs 52.1bn.
Customer base grew by 11% to 21.6m.
SMS revenue grew by 34% to Kshs 13.6bn.
M-PESA revenue increased by 22% to Kshs 26.6bn.
15% increase in 30 day active M-PESA customers to 12.2m – 56% of our total customer base.
Mobile data revenue grew by 41% to Kshs 9.3bn.
34% increase in 30 day active mobile data customers to 9.6m – 44% of our total customer base.
Fixed data revenue growth by 22% to Kshs 2.6bn.
Strong financial and commercial performance
24% growth in EBITDA to Kshs 60.9bn with an EBITDA margin of 42.1% - up 2.5ppt.
Profit after tax increased by 31% to Kshs 23.0bn.
Free cash flow has improved by 56% to Kshs 22.7bn.
Capital expenditure for the period increased by 12% to Kshs 27.8bn.
Bob Collymore, Safaricom Limited CEO commented:
“Once again we have demonstrated our relentless dedication to growing shareholder returns through superior commercial performance across our entire service portfolio as evidenced by our strong financial results. We continued to deliver on our goal to transform lives by providing unmatched services; we made huge improvements in our network quality; and we deepened financial inclusion with the introduction of Lipa na M-PESA on the M- PESA platform.
We have grown our total revenue by 16% to Kshs 144.7bn through focusing on providing quality services that resulted in double digit growth across all our service revenue streams. Voice service revenue which now stands at 60% of total revenue grew at 12% while non-voice service revenue which accounts for 36% of total revenue, sustained its growth trajectory with a 28% increase to Kshs 52.1bn driven mainly by Data and M-PESA. Devices and other revenue contributes 4% of total revenue.
Mobile penetration in Kenya stood at 76.9%* with Safaricom recording the largest subscriber share of 67.9%*. Our customer base has grown by 11% to 21.6m while churn rate dropped to 19% as a result of efforts centered on retaining and rewarding our loyal customers.
Voice service revenue grew to Kshs 86.3bn and accounted for 62% of our service revenue (down from 66% in the previous year). This growth was supported by our loyal customer base attracted by a superior network experience, convenient airtime distribution and attractive consumer propositions and promotions such as the ‘Tetemesha’ campaign.
Messaging revenue once again posted an impressive performance having increased by 34% to Kshs 13.6bn which represents 10% of our service revenue. This was driven by increased usage from affordable SMS bundles and SMS based promotions such as‘Bonyeza Ushinde’.
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￼M-PESA, now contributing 18% of total revenue, continues to be a significant driving force for our growth. This was driven by a 15% increase in 30 day active M-PESA customers to 12.2m as well as an increase in the average number of transactions per customer. In the year, we expanded our M-PESA agent outlets to 81,025 thereby promoting accessability of the service to our customers. With its launch, the Lipa na M-PESA service has enabled cashless merchant payments and facilitated trade between businesses and their customers while improving business efficiency. As at 31 March 2014 the service had 122,000 registered merchants, of which 20% (24,137) were active on a 30 day basis.
Mobile data revenue grew at an impressive 41% driven by an increased uptake of affordable data bundles and a 34% growth in 30 day active mobile data customers to 9.6m. 3.1m customers are on 3G enabled devices of whom 1.9m are on smartphones. Fixed data revenue increased by 22% to Kshs 2.6bn on the back of 4% growth in fixed data customers, and a 16% increase in fixed service ARPU.
We continue to focus on our ‘Best Network in Kenya’ program with Kshs 27.8bn invested in the network during the year, our goal being to provide the best customer experience through improving our network quality, capacity and coverage. We have increased the population coverage of our 2G and 3G networks, completed network modernization in six key cities and rolled out fibre to 50% of our base stations in Nairobi. In October 2013, we commissioned independent drive tests to measure key quality metrics such as dropped calls, voice quality and data speeds, these tests show that our network delivers the best data services and comparative voice services.
Direct costs grew at 10% but at a lower rate than the 16% growth in revenue. This in turn resulted in an improvement in the contribution margin to 64%.
Our operating costs stood at 22% of total revenue as we continue to explore further cost reduction initiatives focused on transmission costs, network operating costs (including fuel) and IT operational costs.
For another consecutive year, we have delivered robust results and ensured value for our shareholders supported by growth across all our revenue streams. This increase in revenue coupled with cost efficiency has driven the EBITDA margin to 42.1%, a 2.5ppt improvement.
Free cash flow has increased by 56% to Kshs 22.7bn as a result of the strong trading results and positive working capital.
In light of the strong financial performance in the past year, the Board recommends a dividend of Kshs 0.47 per share – an increase of 52%. Pending approval by shareholders we will pay out a dividend of Kshs 18.83bn, which represents 82% of our net income, for the year ended 31 March 2014; once again, the largest dividend in Kenyan history.
These are really strong results and that is evidenced in the +51.61% uplift in the Dividend which is the loudest Signal in the Noise.
H1 Revenue 69.201287b versus 59.118149b +17.1%
H1 Cost of Sales [30.215501b] versus [27.529922b] +9.8%
H1 Gross Profit 38.985786b versus 31.88227b +23.4%
H1 Operating Expenses [22.829488b] versus [19.206278b] +18.9%
H1 PBT 15.908812b versus 11.509998b +38.2%
H1 PAT 11.260242b versus 7.7774849b +44.8%
H1 EPS 0.28 versus 0.19 +47.4%
Customer Numbers +8.3% to 20.82m as at September 2013
Mobile Data Customers who were active in the last 30 days +51.7% to 8.48m versus 5.59m
M-Pesa Customers 11.55m as at September 2013
Voice Revenue +12% to 41.92b [63.3% of Total Revenues versus 66.7%]
SMS Revenue +48.7% to 6.35b [9.6% of Total Revenues versus 7.6%]
Data Revenue +37.4% to 5.47b [8.2% of Total Revenues versus 7.1%]
M-PESA Revenue +19.9% to 12.5b [18.9% of Total Revenues versus 18.6%]
M-PESA/SMS/Data revenues +35.1% of Total Revenues versus 31.6%
EBITDA increased by 29.4% to 28.85b
Total Borrowings as at 30 September stood at 12b.
Cash and Cash Equivalents stood at 19.81b.
Net Cash 7.81b.
Free cash flow has improved by 167% to Kshs 13.7bn.
Improved guidance for the full year
Free cash flow expected to be in the range of Kshs 20bn to Kshs 21bn. Calls To Government of Kenya to fast track LTE Frequency Allocation
Safaricom calls for allocation of additional frequency spectrum resources to facilitate nationwide LTE rollout;
Safaricom commits to providing free broadband access to public schools identified as part of the Government’s laptop project for primary school children if LTE spectrum is alloctated by GoK.
A Selection of my Tweets from yesterday
Nick Sato @SatoNick15h
@bobcollymore light moment says that the chatitude bundle was mainly targeted for @alykhansatchu..#SafaricomHalfYearResults2013
Aly-Khan Satchu @alykhansatchu15h
We see a need to upgrade our FY free Cash Flow Number says @Bobcollymore 20-21b from 17.5b
Aly-Khan Satchu @alykhansatchu15h
@SafaricomLtd M-Shwari 2.4m active Customers M-Pesa increased outlets by 33,316 during the Year
Aly-Khan Satchu @alykhansatchu15h
Safaricom 1.5m smartphones on Network says @BobCollymore http://www.twitpic.com/dk3ujz
Aly-Khan Satchu @alykhansatchu16h
#Mobile Data has hit an inflexion Point says CFO @SafaricomLtd http://www.Mobile Data +43.9%
Aly-Khan Satchu @alykhansatchu16h
#Safaricom reports +47.4% Acceleration in H1 2013 Earnings Per Share +38.2% PBT http://www.twitpic.com/dk3ujz @bobcollymore
“The free cashflow will get everyone excited because it means they are raising the dividend payout,” Aly-Khan Satchu, chief executive officer of Nairobi-based Rich Management Ltd., said in an interview. Businessweek
@bobcollymore #Safaricom H1 2013 Earnings
Safaricom have again exceeded the Top End of Consensus estimates.
I think Mobile Data is set to turn parabolic.
I have a Price Objective of 12.00 now.
FY 2013 Earnings through 31st March 2013 versus FY through March 2012
FY Revenue 124.287856b versus 106.995529b +16.2%
FY Gross Profit 67.743420b versus 52.856310b +28.2%
FY Operating Expenses [40.643226b] versus [32.704953b] +24.3%
FY PBT 25.450565b versus 17.369400b +46.5%
FY PAT 17.539810b versus 12.627607b +38.9%
FY EPS 0.44 versus 0.32 +37.5%
FY Dividend 0.31 cents a share +40.9%
Cash and Cash Equivalents at End of Period
Customer Numbers have increased +1.8% to 19.42m [1.4m Customers were disconnected in this Period]
Mobile Data Customers who were active in the last 30 days increased by 56.7% to 7.13m as at March 2013
M-Pesa Registered Customers grew by 14.8% to 17.11m as at end March 2013
Voice Revenue +12.6% to 77.66b
SMS Revenue +30.4% to 10.13b
Data Revenue increased by +27.8% to 8.42b
M-Pesa Revenue +29.5% to 21.84b
M-Pesa/SMS/Data Revenue increased to 32.5% of Total Revenues from 29.2%
FY 2013 Voice Revenue now 65.8% versus 68.8% previously of Total Revenue
FY 2013 M-Pesa Revenue now 18.5% versus 16.8% previously of Total Revenue
FY 2013 SMS Revenue now 8.6% versus 7.8%
FY 2013 Data Revenue now 7.1% versus 6.6%
1.2m Customers using M-Shwari
Giving Free Cash Flow Guidance for FY 2014 of between 15.5-17.5b Kenya Shilling
These Results have exceeded the Top End of Consensus Expectations. FY Revenue of 124.287856b +16.2%, FY PBT of 25.450565b +46.5%, FY PAT 17.539810b +38.9%, FY EPS 0.44 +37.5%
and a +40.9% Dividend Hike to 0.31 cents a share is a Tape that You cannot argue with. The Dividend Yield of 4.46% is high and handsome in particular in a World where Everyone is hunting for Yield. The Growth Curves look attractive and Note Well that Data grew +27.8% even after a very sharp Tarriff Discount.
I expect New All Time Highs in the share Price.
M-Pesa now contributes 18.5% of Total Revenue Safaricom FY 2013 says @BobCollymore Twitpic
H1 2013 versus H1 2012
Total Revenue 59.118b versus 46.09b +21.72%
Voice Revenue 37.422b versus 31.49b +18.84%
Messaging Revenue 4.269b versus 3.65b +16.96%
Mobile Data Revenue 2.972b versus 2.44b +21.8%
Fixed Data Revenue 1.011b versus 0.63b +60.48%
M-Pesa Revenue 10.427b versus 7.88b +32.32%
HandSet Revenue 2.428b -21.93%
Direct Costs 22.399b versus 21.97b +1.95%
Operating Costs 14.427b versus 12.898b +11.85%
EBITDA 22.292b versus 14.76b +51.03%
Net Income 7.775b versus 4.013b
EPS 0.19 versus 0.10
Strong financial results driving investment and shareholder returns
Profit before tax increased by 113% to Kshs 11.5bn
Profit after tax increased by 94% to Kshs 7.8bn
51% growth in EBITDA to Kshs 22.3bn with an EBITDA margin of 37.7%
Free cash flow improved 791% to Kshs 5.0bn
Good revenue recovery from damaging price wars
Total revenue grew by 19% to Kshs 59.1bn
Voice revenues grew by 19% to Kshs 37.4bn
Non-Voice service revenues grew by 28% to Kshs 18.7bn
Continued growth in significance of Non-Voice service revenue (M-PESA/SMS/Data)
Non-voice service revenue now represents 32% of total revenues
Mobile and fixed data revenue increased by 30% to Kshs 4.0bn
M-PESA revenue increased by 32% to Kshs 10.4bn M-PESA has shown significant growth with an increase in registered customers to 15.2m; 9.7m of whom actively use M-PESA at least once every 30 days. This growth in active customers, coupled with an increased number of transactions per active customer, led to a 32% increase in revenue to Kshs 10.4bn. M-PESA now makes up 18% of total revenues.
Improved guidance for the full year
Forecasting low double digit growth in total revenue
Expect to maintain the current EBITDA margin
number of active mobile data customers increase by 30% to 5.59m and a 9% increase in fixed data customers to 6,718. This growth in customers coupled with increased data usage has resulted in a 30% growth in data revenues to Kshs 4.0bn.
Key Performance Indicators
￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼Total customers (m) 19.211m +6.51%
M-PESA registered customers (m) 15.23m +2.41%
Mobile Data - 30 day active customers (m) 5.586m +29.7%
Fixed data customers 6.718m +8.76%
Churn (%) 28.46 +0.57%
Service revenue ARPU 490.69 +11.8%
Voice ARPU 319.56 +11.07%
SMS ARPU 38.5 +8.91%
M-PESA ARPU 115.22 +25.66%
Mobile Broadband ARPU 91.72 -16.75%
Data (SMS/broadband/M-PESA) % total revenue 31.6 +7.34%
Number of M-PESA agents 45.540
2G base stations 2815
3G base stations 1545
Wimax Sites 190
Did he not do well? @BobCollymore Twitpic
Strong 1st Half Results. I think we will see further Acceleration from here.
FY Results Analysis here
Total Revenue 107.00b versus 94.83b +12.83%
Direct Costs 43.47b versus 37.24b +16.74%
Operating Expenses 26.03b versus 21.87b +19.01%
EBITDA 37.5b versus 35.72b +4.96%
Operating Profit 20.15b versus 19.39b +3.93%
Net Financing and Forex Costs 2.78b versus 1.04b +168.44%
FY Profit Before Tax PBT 17.37b versus 18.36b -5.4%
FY Profit After Tax PAT 12.63b versus 13.16b -4.04%
Earnings Per Share 0.32 versus 0.33 -4.04%
Customers 19.07 versus 17.18 +11.01%
Registered M-Pesa Users 14.91m +6.45%
Number of fixed Data Connections 6.020m versus 4.483m +34.29%
Distinct Data Customers 4.553m versus 3.479m +30.86%
Voice revenues 68.96b versus 63.5b +8.59%
Total Data Revenues 31.24b versus 24.7b +26.48%
SMS Revenue 7.77b versus 7.54b +2.96%
M-Pesa 16.87b versus 11.78b +43.19%
Data [Mobile and Fixed] 6.59b versus 5.37b +22.84%
Data Revenue as % of Total Revenue 29% versus 26%
Mobile Service Revenue ARPU 456.00 versus 436.6 +4.43%
Dividend +10% 22 Cents a Share
Strong H2. EPS H2 0.22 versus 0.10 H1 +120%
M-Pesa remains the Jewel and the Menu Reprice happened at the end of the Reporting Period.
The Dividend increase is a Muscular Move.
They Have beaten the Street estimates.
Swot Analysis H1 2012 versus H2011
Revenue 49.63b versus 47.11b +5.3%
Voice 68.3% of Total Revenues versus 74.8%
M-Pesa 17.1% of Total Revenues versus 11.9% +49.3%
SMS 7.9% of Total Revenues versus 8.2%
Mobile Data 6.7% of Total Revenues versus 5.1%
Total Data Revenue 31.7% versus 25.2%
SGA +26% Forex Loss 1.3b Kenya Shillings [Long Close Purchases have been hit by the FX]
H1 2012 EBITDA 14.76b -21.6%
Net Income 4.01b versus 7.63b
EPS 0.10 versus 0.19
Pretax profit fell to 5.4 billion shillings ($55.8 million) in the period from 10.4 billion a year earlier
Safaricom's average revenue per user (APRU) slipped to 438.9 shillings from 456.6 shillings a year earlier, although minutes of use jumped 57.7 percent to 123.
Chief Executive Bob Collymore told reporters the company expected its earnings before interest, taxes, depreciation and amortisation (EBITDA) margin to finish in the low-to-mid 30s and for revenue to grow by high single digits over the full year.
"Providing the assumptions we have made about the macroeconomic environment are right, then our guidance and EBITDA margins and revenue should stay the same," he said.
“92 per cent of all Internet subscriptions in Kenya (are) on Safaricom connected devices.”
This Period captured the most Brutal Period of Competition. Essentially the Competition was [and in most cases still is] selling Minutes at Below Cost. The Voice Revenue Curve bottomed out, however, at the end of this Period. I reminded Michael and Bob, that there had been a similar H1 Outcome and My Analysis shows that Safaricom exhibits quite Beta, in times of High Inflation and Drought. The Macro Picture has been very high beta as well over this Period. The Shilling was the worst performing currency in the World until quite recently. Inflation is just shy of 20.00% and was at about 3.1% a year ago. I asked and was informed that the Recent Price Increase has seen some slackening in Usage [thereby freeing up the network] but this has been more than compensated by the Price Increase. So I think we are past the worse in Voice. M-Pesa continues to exhibit hyper Growth. And the Mobile Internet continues to build. Its clearly been a very tough Reporting Period, however, I think we are through the bottom in the Earnings Trend.
FY 2011 Swot Analysis
12.9% Growth in Turnover to 94.83b
9.8% Growth in Ongoing Revenue 88.20b
Voice Revenue -1.7% 63.5b which is 66.9% of Total Revenue
SMS +45.3% 7.54b which is 5.7% of Total Revenue
M-Pesa +56% 11.78b is 12.4% of Total Revenue
Mobile and Fixed Data Revenue +80.3% 5.37b which is 8% of Total Revenue
Acquisition Revenue 6.64b
Revenue Growth +14.8% +19.1% +12.9%
Minutes of Use Per Subscriber increased from 60.6 to 96.0 minutes
13.8m M-Pesa Users +45.5%
Data Subscribers 4.9m +85.6%
Mobile Data SMS M-Pesa Revenue 26% of Total Revenue
Over 500,000 Data Enabled Hand Sets and Lap Tops sold in the Financial Year
Profit Before Tax PBT 18.36b versus 20.97b -12.4%
Blended ARPU 439 versus 457
Marketing Costs +37%
Dividend Held at 20c a share
Pay Out Ratio of 61%
EPS 0.333 a Share