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Macro Thoughts |
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high tech, millenial, crypto, avocado economy exhibits viral, wildfire and exponential and even non-linear characteristics not unlike Ebola. Africa |
08-JAN-2018 :: The Crypto Avocado Millenial Economy.
The ‘’Zeitgeist’’ of a time is its defining spirit or its mood. Capturing the ‘’zeitgeist’’ of the Now is not an easy thing because we are living in a dizzyingly fluid moment. Whether its President Trump’s rat-a-tat Tweets or a mind boggling 625% share price advance because an erstwhile Tea Company [The Long Island Iced Tea Corp was a little-known company making non- alcoholic lemonades and ice teas] renamed itself the Long Blockchain Corp. We are living in extraordinarily fast moving times. Paul Virilio has said ‘Wealth is the hidden side of speed and speed the hidden side of wealth’ and he is not wrong.
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Missiles maketh the man Nationalist fervour is likely to secure a second term for @narendramodi @TheEconomist Africa |
The scale of an Indian general election can be hard to grasp. With close to 900m registered voters and 1m polling stations, it is as if every country in the European Union, plus America, Canada and Mexico, as well as Japan and South Korea, were all to vote together. Yet the process generally runs smoothly. The voting this time started on April 11th and is divided into seven phases, to reduce the burden on election personnel and police. The use of nearly 4m portable, battery-operated voting machines will make it possible to tally all the votes on a single day, May 23rd.
The counting may run with symphonic precision, but the rest of the proceedings are pure cacophony. With 8,000 candidates from more than 2,000 parties vying for seats in the Lok Sabha, the lower house of parliament, this is less a national election than 543 separate battles. Rules on election spending are loose and often flouted. Estimates of the cost of this year’s contest are as high as $10bn. Since mid-March the Election Commission has seized some $500m of cash, gold, drugs and alcohol it suspects were intended for bribing voters.
Given the advantages he enjoys, Mr Modi is widely tipped to win. The prime minister himself is a talented and tireless campaigner, delivering relentlessly on-message blasts of boosterism mixed with searing swipes at his enemies. Another leg-up comes from having vastly more money. Some of this is unaccountable, but one measure is the value of donations via “electoral bonds”. Since this vehicle for anonymous political gifts was created by the bjp in the name of “transparency” last year, some 95% of all bonds have gone to the ruling party.
Being in power also helps. As elections approached, Mr Modi’s opponents have found themselves targeted by tax raids or police probes.
Mr Modi has mercilessly milked nationalist sentiment, threatening to rain missiles on the enemy in a “night of killing” and scorning his opponents as wobbly-kneed defeatists. Although many Indians, especially those far from the border with Pakistan, find local issues more pressing, the unrelenting bombast has flummoxed Mr Modi’s opponents. Instead of coalescing, they have drifted apart. If the bjp and its closest allies fail to win a majority, he will almost certainly be better placed than Mr Gandhi to court a clutch of regional parties to form a coalition. “If this election were about the fundamentals, Modi and the bjp would be in a pickle,” says Milan Vaishnav of Carnegie, a think-tank. “But given Modi’s popularity, the security dimension and the opposition’s foibles, my sense is the bjp has found a way to make lemonade out of lemons.”
Conclusions
The Prime Minster is a racing certainty.
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Currency Markets at a Glance WSJ World Currencies |
Euro 1.1157 Dollar Index 97.947 Japan Yen 111.48 Swiss Franc 1.0206 Pound 1.2997 Aussie 0.6997 India Rupee 69.3245 South Korea 1170.35 Won Korean Won drops to 2 year low 1171.75 Wonder if the smart people will remember Korea as leading indicator of global growth. [@SunChartist] Brazil Real 3.9676 Egypt Pound 17.1775 South Africa Rand 14.5468
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How @satyanadella remade @Microsoft into the world's most valuable company @BW World Currencies |
The Most Valuable Company (for Now) Is Having a Nadellaissance Under Satya Nadella, Microsoft has more subscribers than Netflix, more cloud computing revenue than Google, and a near-trillion-dollar market cap Nadella appears irritated by questions about the company’s ascendancy. “I would be disgusted if somebody ever celebrated our market cap,” he tells Bloomberg Businessweek. He insists the valuation—which passed $1 trillion on April 25 and is up more than 230 percent since his watch began in February 2014—is “not meaningful” and any rejoicing about such an arbitrary milestone would mark “the beginning of the end.” Microsoft marketers like to attribute its reemergence as a tech power to a sort of cultural rehab, involving what Nadella calls corporate “empathy” and a shift of his team from a “fixed mindset” to a “growth mindset.” The reality of the company’s turnaround was more painful, according to interviews with more than four dozen current and former executives, board members, customers, and competitors. Under Nadella, it cut funding to Windows and built an enormous cloud computing business—with about $34 billion in revenue over the past year—putting it ahead of Google and making progress in key areas against the dominant player, Amazon Web Services. “I don’t know of any other software company in the history of technology that fell onto hard times and has recovered so well,” says Reed Hastings, CEO of Netflix Inc. Microsoft’s Office collection of productivity software, formerly a one-off purchase that included the famously inept virtual assistant, Clippy, is now a cloud-based service boasting more than 214 million subscribers who pay around $99 a year; it has more subscribers than Spotify and Amazon Prime combined. At the same time, Azure, Microsoft’s cloud platform, has won marquee customers such as ExxonMobil, Starbucks, and Walmart. There’s a bit of Silicon Valley cred, too, thanks to its acquisitions of LinkedIn, the professional social network, and GitHub, the software code repository. Shelley Bransten, a Microsoft corporate vice president, suggests that what makes Nadella unique is that he has “no swagger.” Nadella’s game plan was to reorient Microsoft around Azure, a nascent business he’d been working on since 2011, which would turn the company from a provider of boxed software (which many users simply pirated) to a global computing engine that would rent out its processing power and online storage to businesses. Of the 100 or so CEO candidates considered, Nadella most impressed then-Chairman Gates and the board with his strategic and engineering chops. The cloud is conceptually thought of as a digital exchange of bits, but it’s actually all about physical infrastructure—airplane-hangar-size data centers and transoceanic cables yo-yoing petabytes of information. Amazon, Microsoft, and the other big cloud players enable other companies to outsource vast computing requirements to these costly infrastructures, which means Netflix can seamlessly stream movies to your phone or Citibank can process billions of online transactions without having to do major construction projects. Then, 13 minutes in, he piped up, pitching a cloud partnership. “We don’t want you to think of this as just building an app on our platform,” Nadella said. “We want to enable you to build your own platform.” Nadella didn’t acknowledge it, but everyone knew this was a dig at Amazon. Jeff Bezos’ company has been ruthlessly expanding, posing a potential threat to cloud customers, such as big-box retailers and entertainment companies, even as it seeks to store their data in its servers. “Microsoft does it in a tasteful manner, but they don’t leave you mistaken in your impression that Bezos could be lurking in your backyard and machine learning your data and targeting your customers,” says a former e-commerce company vice president who struck a large cloud partnership with Nadella. “In the Ballmer days, it was bluster. But Satya has gotten really good at pointing out, ‘Do you want your technology partner to be your competitor?’ ”
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@IMFNews had, in January, already reduced its October 2018 projection for real GDP growth in sub-Saharan Africa (SSA) in 2019 from 3.8% to 3.5%, which remains unchanged @Africa_Conf Africa |
Yet the latest IMF figures confirm that since Bali, it has reduced 2019 growth predictions for over 20 economies in SSA and North Africa including: Algeria, Angola, Cameroon, Ethiopia, Kenya, Nigeria, South Africa, Tanzania, Tunisia, Zambia and Zimbabwe. The World Bank slashed its projections of 2019 SSA growth from 3.3% in October and 3.4% in January to 2.8% now and, unlike the IMF, now says overall SSA growth decelerated between 2017 and 2018. The Bank, like the IMF and most economists, believes that, overall, the SSA economy will expand more quickly this year than last. Like the IMF, the Bank has since October reduced its growth projections for SSA's three largest economies, South Africa, Angola and Nigeria. They remain a drag on the region's growth and are predicted, as a group, to register negative per-capita growth this year, in 2020, and in 2021. The African Development Bank (AfDB), ahead of its June-scheduled annual meeting in Malabo, Equatorial Guinea, maintains that East Africa will, as in 2018, outpace, in declining order of growth, North Africa, West Africa, Central Africa and Southern Africa this year and next. Yet the AfDB's prediction for Africa's fastest growing region, at less than 6%, falls short of the IMF's predicted economic expansion in Emerging and Developing Asia even if faster, on average, than the group of 'ASEAN-5' economies (Indonesia, Malaysia, Philippines, Thailand, Vietnam). Convergence of average SSA living standards with more economically-developed regions appears improbable for now. Aside from potential debt struggles, Africa's economies remain vulnerable, like the world economy, to a number of risks. The IMF estimates, for example, that the combined impact of a deterioration in financing conditions, commodity prices, increased US trade policy-related uncertainty and trade tensions, and slower China growth could conceivably reduce SSA growth by 2% this year – with commodity exporters the most affected. Other risks to African growth remain: banking sector fragility, the economic impact of insecurity and conflicts, and adverse climate conditions. As climate change protests attract international attention, climate shocks have already impacted Africa's economy this year, including Cyclone Idai, which has already Zimbabwe's short-term economic prospects, and caused a humanitarian crisis in Mozambique. Despite reduction in African growth projections, and persistent downside risks, other developments are seized upon by Africa optimists. In particular, hopes have been raised of an economic boost from the African Continental Free Trade Area, now ratified by over 20 African economies albeit not, for example, Angola and Nigeria.
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ZAMBIA Treasury in the red @Africa_Conf Africa |
The liquidity problems are getting worse and state asset sales are looking more likely as a last resort to avoid debt default The lavish spending and borrowing of President Edgar Lungu's government is starting to catch up with it. Africa Confidential has learned that in March, it had to raid the state pension fund, the National Pension Scheme Authority (NAPSA), to pay overdue February salaries for public service employees.
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@MTNza Plans Sale of #Jumia Stake@MTNza Plans Sale of #Jumia Stake After Agreed Lock-In @business After Agreed Lock-In @business Africa |
MTN Group Ltd. plans to sell at least half of its $655 million interest in newly listed Jumia Technologies AG as Africa’s biggest wireless carrier looks to pay down debt and enter new markets, according to people familiar with the matter. A selldown of the 19 percent stake in the online retailer could happen before the end of the year, said the people, who asked to remain anonymous as the deliberations are private. Johannesburg-based MTN first needs to wait out a half-year investor lock-in period that followed Jumia’s successful share sale in New York, they said. “We have a six-month lock-up period where we can’t sell our shareholding,” an MTN spokesman said. “Post that period we will apply our minds on what to do with the investment.” MTN is the biggest investor in Jumia, the best performing IPO in New York this year with its share price more than tripling since its April 12 debut. Yet MTN has earmarked e-commerce assets as not central to the company’s main business of phone and data services, and has announced a 15 billion-rand ($1 billion) disposal plan. Other investments that could be sold include interests in flight-booking site Travelstart.co.za and telecommunication masts-operator IHS Towers Ltd. Net debt rose to 63.5 billion rand from 57 billion rand in 2018, and proceeds will be used to pay that down, MTN said in March. Often nicknamed Africa’s Amazon.com, Jumia operates in 14 African countries including Nigeria and Ivory Coast where the U.S. giant lacks distribution infrastructure and much presence. The company is headquartered in Germany and run by its two French founders, Sacha Poignonnec and Jeremy Hodara. MTN’s shares have gained almost 7 percent since the Jumia IPO, valuing the company at 194 billion rand. The stock hit eight-month highs earlier in April.
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@SafaricomPLC share price data here reports FY EPS +14.7% #SafaricomFYResults Africa |
Par Value: 0.05/- Closing Price: 29.55 Total Shares Issued: 40065428000.00 Market Capitalization: 1,183,933,397,400 EPS: 1.58 PE: 18.7025
Safaricom FY 2019 Results for the year ended 31st March 2019 vs. 31st March 2018 FY Voice revenue 95.94b vs. 95.64b +0.3% FY Mpesa Revenue 74.99b vs. 62.91b +19.2% FY SMS Revenue 17.50b vs. 17.72b -1.3% FY Mobile data revenue 38.69b vs. 36.36b +6.4% FY Fixed service revenue 8.19b vs. 6.67b +22.7% FY Other service revenue 5.00b vs. 5.24b -4.5% FY Service revenue 240.30b vs. 224.54b +7.0% FY Handset revenue and other revenue 9.58b vs. 8.98b +6.7% FY Other income 0.46b vs. 0.51b -8.9% FY Total revenue 250.96b vs. 234.22b +7.1% FY Direct costs [71.82b] vs. [70.55b] +1.8% FY Contribution margin 178.53b vs. 163.47b +9.2% FY Operating costs [53.65b] vs. [50.61b] +5.8% FY Forex loss on trading activities 0.06b vs. [0.03b] +300.0% FY EBITDA 124.94b vs. 112.83b +10.7% FY Depreciation and amortization [35.33b] vs. [33.56b] +5.3% FY EBIT 89.61b vs. 79.27b +13.1% FY Net financing, FX and fair value gains 2.24b vs. 0.63b +255.6% FY Earnings before taxation 89.61b vs. 79.27b +13.1% FY EBIT Margin 35.8% vs. 33.9% +1.9% FY Net income 63.40b vs. 55.29b +14.7% EPS 1.58 vs. 1.38 +14.7% Shareholders’ Funds 143.24b vs. 123.91b +15.6% Cash and cash equivalents 20.03b vs. 9.50b +110.842% Total Net Cash 16.00b vs. 5.46b +193.040% Free cash flow 63.11b vs. 55.39b +13.938% Normal dividend per share 1.25 vs. 1.10 +13.636% Special dividend per share 0.62 KEY HIGHLIGHTS Full-Year Guidance Achieved • Service revenue growth of 7% to KShs 240.30bn. • Voice service (incoming and outgoing) revenue grew by 0.3% to KShs 95.94bn. • M-PESA revenue grew by 19.2% to KShs 74.99bn. • Mobile data revenue increased by 6.4% to KShs 38.69bn. • Messaging revenue declined by 1.3% to KShs 17.50bn. • Fixed service revenue increased by 22.7% to KShs 8.19bn. • Total customer base increased by 7.7% to 31.8m. • 30-day active M-PESA customers increased 10.2% to 22.6m. • 30-day active mobile data customers increased 6.6% to 18.8m. Strong financial performance • 13.1% growth in EBIT (Earnings before Interest) to KShs 89.61bn with an EBIT margin of 35.8%, up 1.9ppts YoY. • Net Income increased by 14.7% to KShs 63.40bn. • Free Cash Flow up 13.9% to KShs 63.11bn. Bob Collymore, Safaricom PLC CEO commented: In a year where macro issues weighed on customer choice, we continued to generate positive momentum. We achieved this by focusing on the customer, investing in the quality of our service, the performance of our network and creating differentiated customer experiences. Our actions were guided by our purpose of transforming lives. Our top priority for FY19 was focusing on the customer and I am pleased to advise that we have witnessed improved customer sentiment, through measures such as NPS and brand consideration. This translated into an accelerated growth in customers from 400k in the first half of the year, to 1.9m in the second half of the year. We increased the use of data analytics to provide predictive, proactive and personalised offers to our customers, driving down effective prices of our offering. This impact can be clearly seen within mobile data and voice with the average rate per megabyte reducing 42% YoY, and the average rate per minute reducing 10%. We sustained our level of investment in FY19, with capital expenditure totalling KShs 37.25bn for the year. This enabled us to expand our network to ensure the widest reach to our customer base. We increased our sites by 9% year on year, and our 3G and 4G coverage to 93% and 57% respectively, and we have plans to accelerate our 4G roll out this coming year to cover every town in the country, thus cementing ourselves as Kenya’s best 4G+ network. We extended our fibre footprint to 6,700kms, up from 5,000kms last year. We also invested in network quality including rolling out a capacity upgrade on the M-PESA platform to support 1200 TPS (transactions per second) up from 900 TPS and the deployment of a 400G network link. Innovation and partnerships continue to define our approach to revenue diversification and growth. This year we made good progress by securing key partnerships for our M-PESA business including AliExpress to drive our payments business, Western Union to drive remittances and “Fuliza”, our overdraft product, to drive lending. We continue to accelerate our digital transformation and agile agenda. Our continued focus on digital engagement with customers enabled us to launch “Zuri”, an artificial intelligence (AI) Chatbot assistant, to meet our customer requests through automated, digital support. Zuri enables our mobile data users to perform a wide range of tasks saving on costs and driving efficiencies. Looking ahead, the business will sustain its momentum of investing in the quality of our service and diversification of our revenue portfolio to ensure sustained returns to shareholders. We are excited about the future of M-PESA expansion, Home including surveillance and content, E-commerce, Agri-business and Enterprise solutions including IoT (Internet of Things). We remain committed to our purpose of transforming lives. Our latest True Value Report indicates that Safaricom’s value to the Kenyan society increased by 12% to KShs 543 billion. This was 10 times more than the financial profit the company made during the same period, and we contributed a total of 6.5% to the country’s Gross Domestic Product. We continue to leverage in the power of mobile technology to deliver on shared value propositions that disrupt inefficiencies and impact lives positively in health, agriculture and education sectors, such as M-Tiba, DigiFarm, Shupavu and M-Salama. Operating review Service Revenue growth of 7% for the year was driven by strong M-PESA performance, contributing roughly three quarters of the service revenue growth. Mobile data and fixed data combined contributed roughly one quarter of the growth. Voice and messaging Voice grew 0.3% and messaging declined 1.3%, driven by competitive pressures and migration to newer technologies. Voice and messaging are now 47.2% of service revenue. M-PESA M-PESA grew 19.2% for the year. The growth in M-PESA has been driven by an increased number of users, higher velocity of funds within the ecosystem, and adoption of new use cases. In the period, we added 2.1 million active M-PESA customers. MPESA now accounts for 31.2% of service revenue, further accelerating displacement of traditional voice and messaging services. Mobile Data Mobile data revenue increased by KShs 2.33bn on an absolute basis, and continued to witness a slow-down in the growth rate from the first half of the year, growing at 6.4% for the full year. The slow-down in growth reflects both competitive conditions in the market and increased taxation that was absorbed for in bundle customers. Mobile data is now 16.1% of service revenue. Fixed Data The business continues to extend the reach of fibre broadband which is now available to more than 100k homes connected. Safaricom has now passed nearly 300k homes and has more than two thousand fibre ready buildings. Fixed data now contributes 3.4% to total service revenue and grew at 22.7% year on year in the period. Capex We sustained strong investments in FY19. Our capital additions of KShs 37.25bn, expressed as a percentage of our revenues remained in the ‘mid-teens’, driven by our focus on enhancing monetization and cost savings opportunities upon deployment. IFRS15 During the 2019 financial year, the Group adopted IFRS15 accounting standard, which has been reported alongside our results in FY19 on an IAS18 basis. Dividend The board remains committed to investing in the business and continuing our strong record for paying progressive dividends each year. The proposed dividend for FY19 is KShs 50.08bn, an increase of 13.6% year on year. Given the strong position of the balance sheet, we are also happy to propose a special dividend for this year of KShs 24.84bn. Summary and outlook We are pleased with the strong results we have delivered for the year, building on our long track record of consistent delivery, protecting shareholder wealth and putting the customer first, and we foresee continued growth in the future Our financial outlook for 2020 reflects the adoption of the IFRS 15 and IFRS 16 accounting standards guidance for EBIT moving from KShs 89bn to KShs 93-97bn, with Capex remaining within the KShs 36-38bn range.
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