19th April 2014
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Company Data
Safaricom Ltd.
Par Value:                  0.05/-
Closing Price:           13.20
Total Shares Issued:          40044601000.00
Market Capitalization:        528,588,733,200
EPS:             0.44
PE:                 30.000

First Half Earnings for the Period ended 30 September 2013
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%

Company Commentary

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

Company Commentary

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%

Further Commentary
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%
Revenue Analysis
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%
OPEX +23%
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%
Gearing 19%
Dividend Held at 20c a share
Pay Out Ratio of 61%
EPS 0.333 a Share
Average Price Over the last 5 Weeks
Average Price Over the last 5 Months
No. Of Shares Traded Over the last 5 Weeks
No. Of Shares Traded Over the last 5 Months
Market Capitalization Over the last 5 Weeks
Market Capitalization Over the last 5 Months
Data Source: Nairobi Stock Exchange
Trading Day: 17 Apr 2014
  31-MAR-2014 ::  Public announcement on listing of additional shares
  Public announcement on listing of additional shares

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  05-MAR-2014 ::  Cautionary announcement from Safaricom Ltd
  Cautionary announcement from Safaricom Ltd

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  06-NOV-2013 ::  Change of Directors
  Change of Directors

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  05-NOV-2013 ::  Safaricom Ltd Press Release Half Year-30th September 2013
  Safaricom Ltd Press Release Half Year-30th September 2013

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  05-NOV-2013 ::  Safaricom Ltd Press Commentary Half Year-30th September 2013
  Safaricom Ltd Press Commentary Half Year-30th September 2013

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  12-AUG-2013 ::  Directorship changes
  Directorship changes

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  29-JUL-2013 ::  Annual report for the period ended31st March 2013.
  Annual report for the period ended31st March 2013.

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  14-MAY-2013 ::  Safaricom Ltd Press Commentary Annual Results-31st March 2013
  Safaricom Ltd Press Commentary Annual Results-31st March 2013

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  14-MAY-2013 ::  Safaricom Ltd Press Release Annual Results-31st March 2013
  Safaricom Ltd Press Release Annual Results-31st March 2013

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  14-MAY-2013 ::  Annual Results Announcement Letter - 2013
  Annual Results Announcement Letter - 2013

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