Safaricom has announced the results for the first half of the 2012/2013. The announcement was made at the Michael Joseph Centre on Thursday afternoon and marks a year since the firm announced its first huge drop (41 percent) in profit.
The announcements were made to reporters and financial analysts and was attended by key Safaricom staff including Chairman Nicholas Ng'ang'a, CEO Bob Collymore and CFO, John Tombleson.
This year's results saw a huge recovery of +113 percent to Kshs 11.5 billion before tax. Collymore described the results as " a good recovery from damaging price wars". The CEO also said that the firm had decided to focus on delivering a good customer experience rather than price wars, which was now paying off in good results.
The results are promising as the second half typically delivers better performance than the first half.
Key highlights are as below:
Net profit up 93.8 percent to Ksh. 7.77 billion from KSh. 4.01 billion
Net income up 93.8 percent to Ksh. 7.78 billion
Total revenue up 19 percent to Ksh.. 59.1 billion
Voice revenue up 19 percent to Ksh. 37.4 billion
Non voice revenue(SMS, Data and M-pesa) up 28 percent to Ksh. 18.7bn
Earnings before interest, taxes, depreciation and amortization (EBITDA) up 51 percent to Ksh. 22.3 billion.
Free cash flow up 791 percent to Ksh. 5 billion from 0.7 billion
Customer number ups 7 percent to 19.2 million
Ksh. 650 million in to be spend in corporate social responsibility
Contribution to total revenue growth by breakdown
5.9 percent from voice
0.62 percent from SMS
0.91 percent from data
2.55 percent from M-pesa
Decline of 0.52 percent from handsets
Non Voice growth:
32 percent growth for M-pesa
17 percent growth for SMS
22 percent growth for mobile data - slow growth attributed to new data users with lower ARPUs
60 percent growth for fixed data
Commenting on the voice sector, Collymore says growth has come from a Ksh. 1 drop in off net call pricing to match on net pricing at Ksh. 4.
32 percent of voice top up come from M-pesa
contributes 18 percent of total revenue
M-PESA agents grew by 40 percent (6,000 new agents) to 45,540
Ksh. 69 billion deposited into M-pesa via agents in September 2012
Ksh. 62 billion withdrawn by users via agents in September 2012
Ksh. 80 billion in transfers transacted between customers in September 2012 equivalent 31 percent of Kenya's Gross Domestic Product
Collymore says that Safaricom is in discussion with the government on implementation of a new 10 percent excise duty on M-pesa transaction fee. Collymore terms it a "consumer tax which is to be borne by consumers" despite treasury directing the tax was to be absorbed by operators and not to be passed to consumers.
30 percent growth in mobile and fixed data
data users at 5.6 million accounting for 29 percent of total users
9 percent increase in fixed data(WIMAX and fiber) customers to 6,718
Low growth attributed to new customers with lower ARPUs and halving of data prices in the year
1.8 million 3G handsets and 536,000 smartphones
Average usage at 60 Mb per month per data customer
Average Revenue Per User (ARPUs)
12 percent overall increase to Ksh. 491 from Ksh. 439
Voice ARPU at Ksh. 320 from Ksh. 288
SMS ARPU at Ksh. 39 from Ksh. 35
M-pesa ARPU at Ksh. 115 from Ksh. 92
Data ARPU at Ksh. 92 from KSh. 110 (see explanation above)
2 percent increase in costs to Ksh. 59.12 billion
Ksh. 3.57 billion in interconnection costs
Ksh. 9.39 billion in dealer discounts
Ksh. 2.58 billion in handset costs
Ksh. 0.36 billion in bad debts
Ksh. 3.22 billion in license fees
Ksh. 3.28 billion in other direct costs ( SIM cards, top-up cards, VAS billing, Acquisition and Retention costs)
Ksh 36.72 billion "contribution margin"
Operating costs (Payroll, Publicity, Leased Lines, Network & IT operational costs, and Other (rent, rates, insurances, etc)) increased 12 percent to Ksh. 14.4 billion but remained at 24.6 percent of revenue. Safaricom will try to reduce the costs by trying to reduce transmission costs, inventory costs, network operating costs (including fuel), • IT operational costs, headcount control (employee numbers) and insurance.
Capital expenditure stood at Ksh. 8.55 billion going to modernisation of Safaricom's network and increasing base station efficiency.
Base Station highlights:
Built 125 2G and 106 3G cell sites in last 6 months
modernised 410 sites
1,856 out of 2,815 sites modernised
1545 3G sites and 190 Wimax sites
Next six months will see deployment of 143 2G and 66 3G sites
233 sites in Eldoret, Eastern, Central Rift and South Nyanza to be modernised in coming six months
Collymore says the firm is working to improve voice quality and reduce amount of dropped calls in Nairobi.
Safaricom is investing Ksh. 5 billion in the next 10 years to build its own fiber network, 500 kilometre of fiber per year.
More on the results at http://www.safaricom.co.ke/images/Downloads/Resources_Downloads/Half_Year_2012-2013_Results_Presentation.pdf .