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Mwango Capital
Safaricom Earnings Note
Exploring Safaricom’s performance from HY 2012 to HY 2022
Erick Mokaya, CFA
Boniface Oyunge, ACIFA
Eric Maina
For Information Only
Mwango Capital
Key Highlights
2
Performance in H1 FY22
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Service Revenue
3 Source: Financial Statements
• HY 2021: -4.8% to KES 118.41B
• HY 2022: +16.9% to KES 138.43B
• HY 2012 - HY 2022 CAGR: 11.63%
Recovery to KES 138.43B driven by M-PESA revenue growth.
Mwango Capital
Service Revenue Contribution
4 Source: Financial Statements
M-PESA top contributor growing by 45.8% following return to charging of previously zero rated transactions
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Service Revenue Mix
5 Source: Financial Statements
M-PESA now accounts for 37.8% of total service revenue from 27.4% in H1 FY18 Voice comes second at 29.9%; Data is a distant third at 17.1%
H1 FY22 H1 FY18
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M-PESA v Voice
6 Source: Financial Statements
M-PESA displaced voice for the first time earning KES 52.32B compared to voice at KES 41.46B
HY 2012 - HY 2022 CAGR:
• M-Pesa: 20.84%
• Voice: 2.79%
M-PESA & voice were at par in FY 2021 both earning KES 83B
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M-PESA v Voice
7 Source: Financial Statements
Growth rates for M-PESA and Voice between HY 2012 & HY 2022
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Total Revenue
8 Source: Financial Statements
• HY 2021: -4.8% to KES 124.54B
• HY 2022: +17.5% to KES 146.37B
• HY 2012 - HY 2022 CAGR: 11.42%
Recovery to KES 146.37B
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Net Income
9 Source: Financial Statements
• HY 2021: -6.0% to KES 33.07B
• HY 2022: +12.1% to KES 37.06B
• HY 2012 - HY 2022 CAGR: 24.90%
Recovery to KES 37.06B
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EBITDA & Net Income
10 Source: Financial Statements
Average 45.4% EBITDA margins and 20.5% Net Income margins over this period
Ethiopia:
• EBITDA breakeven in Year 4
• EBITDA margin estimated at
around 40% in Year 10
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Capital Expenditure
11 Source: Financial Statements
Average Capex spend of KES 16.72B from HY 2012 to HY 2022
Capital expenditure in Ethiopia
estimated at between USD 1.5B-2.0B
over the next 5 years
4G, 3G, & 2G population coverage now
stands at 95.9%, 96.3%, & 96.9%
respectively
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Market Share
12 Source: Communications Authority of Kenya
June 2021 June 2021
64.2% market share; 68.2% voice traffic market share
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Looking Forward
13
EBIT in FY22 to be in the range of KES 97-100B; Capex in the range of KES 70-73B inclusive of Ethiopia Excluding Ethiopia EBIT guidance given in May revised to KES 107-110B; Capex revised to KES 40-43B
Mwango Capital
Ethiopia:
• Commercial launch in mid 2022
• The ongoing political conflict
• Funding sources
• Mobile financial services
• Building of infrastructure
14
Looking Forward Some things to watch
“The opportunities outweigh the risks
in our view and the uncertainties largely
because the telecom market
revitalization has been unquestionably
positive and of value for countries
across the word”
Safaricom CEO Peter Ndegwa