The Star (Nairobi)

Kenya: Scramble for Safaricom Shares

On Monday last week, I was on Pennsylvania Avenue in Washington participating in a panel at the World Bank. One of my co-panellists was Jacqueline Novogratz [The CEO and founder of the Acumen Fund] and she said; 'Kenya is a Leader at bringing technology to the bottom of the pyramid.'

And as I flew back I was keenly anticipating Safaricom's half year earnings release. I was certain the results were going to be muscular and as I entered the Michael Joseph Centre, I found the chairman Nicholas Nganga, Michael Joseph and of course, Bob Collymore and all of them were exuding a level of confidence that was a message all of its of its own and the highest I had witnessed since the share was listed at the Nairobi Securities many moons ago. The signal was loud and clear through the noise of the pre-action before Bob read out the Results.

The earnings tape read as follows. Profit before tax increased by 113 per cent to Sh11.5 billion, profit after tax increased by 94 per cent to Sh7.8 billion, total revenue increased +21.72 per cent to 59.118 billion, voice revenue grew +18.84 per cent to 37.422 billion, M-Pesa revenue +32.32% to 10.427 billion.

The previous 1st Half in 2012 had been a brutal one when the competition had been at its most irrational so I admit there is some flattery in the comparison but it would be churlish not to recognise that these numbers confirm the machine has changed gears and that the captain [who likes flying helicopters] has gotten lift off.

Total customers grew 6.51 per cent to 19.211 million, M-Pesa registered customers now total 15.23 million, Average Revenue Per User [ARPU] increased +11.8 per cent, Voice ARPU was +11.07 per cent, M-Pesa ARPU +25.66 per cent, mobile broadband ARPU eased -16.75 per cent as Safaricom began to chase customers more aggressively.

The tape is your elescope said Edwin Lefevre in his book reminiscences of a Stock Market Operator and that rule is a constant and the earnings tape released by Safaricom confirms that Bob Collymore has now put his stamp on this business.

The stock market had its first opportunity to react on Friday and promptly rallied Safaricom 7.9 per cent higher to close at 4.80 and this is a 22 month closing high and the last time the price was here was in January 2011. Safaricom is +70.169% this Year and is all set to cross 5.00.

Coincidental with the Safaricom earnings release, Bharti Airtel announced its 11th consecutive quarter of profit decline and that losses in its Africa operations widened to 5.39 billion rupees from 4.27 billion rupees a year earlier.

And in that comparison, between Safaricom and Bharti Airtel, you understand that captain Bob has lifted Safaricom above the turbulence and into a deep Blue sky. Sun Tzu said: "Ultimate excellence lies not in winning every battle, but in defeating the enemy without ever fighting."

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