Safaricom announced its FY 2014/15 results today, surpassing expectations by posting a 38% increase in profit after tax to shs. 31 billion. The results were bouyed by growth of its non-voice revenue which we covered widely this morning.
We’ve rounded up 10 takeaways from Safaricom’s full year results.
1. M-pesa is Huge For Safaricom
The M-pesa money transfer service now represents 20% of Safaricom’s total revenue. The service currently has 13 million active monthly users representing nearly 50% of all Safaricom subscribers. Safaricom recently migrated its servers from Germany and is now hosting them in Kenya a move that has led to increased transactions speeds from 10 seconds to 3 seconds. Safaricom is also seeking to diversify the platform with services such as M-shwari in collaboration with Commercial Bank of Africa, that currently has 10 million registered users and 5.8 million active users. Others include the Lipa na M-pesa platform that has 49,413 and 11.6 billion worth of payments on the platform. Other services are M-pesa Surepay targeting government agencies and NGOs as well as the newly launched KCB M-pesa account.
2. Voice is Hurting But SMS is Healthy
Voice is Safaricom’s core business but registered a mere 4% growth in revenue to 87.4 billion. More users are using the internet for communication, which is a global trend. The recent launch of VOIP services on popular instant messaging platform Whatsapp is also likely to affect Voice revenue going forward. Safaricom plans to move the voice data from 2G to LTE in six months with the latter being cheaper to maintain. At the same time SMS continues to stand firm contributing 10% of the company’s revenue.Growth in messaging was as a result of affordable SMS bundle as well as SMS promotions such as ‘Bonyeza Ushinde’.
3. The Box
Safaricom is set to unveil tomorrow its media streaming box called the Big Box. The company will be providing buyers of the Big Box with free internet for the first six months. There is also free YouTube for users for three months. The Big Box will run on Android, will provide internet access via a 4G SIM slot as well as act as a wireless hotspot besides also being a gaming device. Streaming aside, the Big Box decoder will also have local channels. Keep it here for more on the Big Box.
4. Data is Part of the Future
Mobile data registered a 59% growth with monthly data customers increasing to 11.6 Million which represents 50% of Safaricom’s customer base. Interestingly, 4.3 million customers were using 3G enabled phones with 3.4 million using smartphones. Safaricom is already restructuring the model through which it sells its data bundles offering. This involves the introduction of data expiry periods. The model has been successful allover the world, with the internet service providers reaping better incomes from the data packages sold.
5. The Youth Love Safaricom
The Youth seem to love the Safaricom brand with 79% Youth Brand awareness. In addition, Safaricom registers 1 million youthful subscribers annually. Looks like the Safaricom activ8e , The groove tour and the Safaricom tour live parties are beginning to pay off.
6. Bob Collymore is CEO for Another 2 years
The Safaricom Board of Directors also decided to extend the mandate of CEO Bob Collymore for another two years. Nicholas Ng’ang’a, the Chairman of the Board lauded Collymore’s performance at the helm which informed the decision to extend his mandate. Under Collymore’s leadership, several key projects such as the transfer of M-pesa servers, rollout of 4G and content delivery have been initiated with some still ongoing. This may have also informed the decision to retain the CEO for continuity purposes.
7. Network Infrastructure
Safaricom invested 33.7 billion in improvement of the quality of network as well as coverage and capacity. Currently, the network is rolling out 4G with Nairobi and Mombasa covered through 236 sites. A planned expansion will cover 13 towns by the end of the year. Safaricom has 3,382 2G base stations, 1,943 3G base stations and 195 wimax sites. Safaricom hopes to extend its fiber connection to 1,000 buildings as well as improve its fixed data and managed service offerings.
8. 42% of Kenya GDP transacted via M-pesa
In the period, shs. 4.2 Trillion was transacted through the mobile money platform representing 42% of the Kenya’s GDP. GDP is a measure of the value of goods and services an economy produces. This is an interesting figure as partly because GDP does not represent the amount of money that that pays for goods and services. In addition, M-pesa mobile money transactions quote flows both into and out of the mobile money system meaning there might be some double counting. However, according to the Central Bank, mobile money contributes a staggering 66.56% of the total NPS which may make the figure accurate.
9. Safaricom is Bigger Than Burundi, Lesotho and Swaziland’s Economies
Safaricom’s market capitalization as at close of business today stood at Kshs. 703 billion or $7.4 billion. This is bigger than the GDP of several African nations including Burundi, Swaziland and Lesotho. If Safaricom was a country, it would probably rank as among the poorest in Africa if their market capitalization was to act as a representative of their Gross Domestic Product.
10. Loads of Cash Reserves and Largesse in Dividend Payouts
Safaricom currently has Shs. 27.5 billion in cash reserves which represents a 21% increase in free cash. I suppose this will be used for network upgrades, acquisitions and research and development. The company will also payout dividends of Shs. 25.65 billion representing 80% of the company’s net income which is a first in Kenya.