Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Safaricom PLC (NAI:SCOM, Financial) reported strong financial performance in Kenya with double-digit growth in both top and bottom lines.
- The company achieved a 12.9% growth in service revenue, reaching KES177.5 billion for the half-year.
- Safaricom PLC (NAI:SCOM) has made significant progress in Ethiopia, with a 47.3% increase in customer base and strong mobile data usage.
- The company continues to innovate with new products, such as the revamped wealth proposition and insurance solutions, contributing to growth.
- Safaricom PLC (NAI:SCOM) is committed to sustainability, with efforts to achieve 95% of sites powered by green energy by 2030.
Negative Points
- Economic recovery in Kenya is fragile, with constrained fiscal space and declining disposable income affecting customer spending.
- The foreign exchange reforms in Ethiopia have led to a significant impact on financials, with a net income decline of 17.7% for the group.
- Operating costs have increased by 15.7% year-on-year, driven by higher energy consumption and payroll-related costs.
- The company faces challenges in Ethiopia due to the foreign exchange regime reforms, impacting short-term financial performance.
- There is a need to address customer concerns about data privacy and potential sharing of information with government entities.
Q & A Highlights
Q: How does Safaricom plan to maintain connectivity revenue growth while keeping prices in check?
A: Dilip Pal, CFO, explained that Safaricom is focusing on integrated bundling, allowing customers to choose how much they use for voice, data, or messaging. This approach aims to drive usage and customer growth without necessarily increasing prices. The company is also leveraging its 4G and 5G networks to enhance customer experience and usage.
Q: What impact might the proposed tax laws amendment have on Safaricom, and how is the company responding to regulatory changes?
A: Peter Ndegwa, CEO, stated that Safaricom is engaging with the government and industry stakeholders to balance tax proposals with customer impact. The company is also working to ensure that digitization benefits are not rolled back as tax authorities expand their base.
Q: How can Safaricom leverage the momentum of M-PESA in Ethiopia to grow its connectivity business?
A: Wim Vanhelleputte, CEO of Safaricom Ethiopia, noted that while M-PESA sign-ups are strong, the focus is on converting these into active users. The strategy involves encouraging existing voice and data customers to use M-PESA services, thereby increasing overall engagement and usage.
Q: Can you explain the discrepancy between M-PESA and connectivity user numbers in Ethiopia, and how do you see this evolving?
A: Wim Vanhelleputte clarified that while there are 8 million M-PESA sign-ups, only 1 million are active users. The focus is on converting the 6 million active connectivity users to also use M-PESA. Over time, as the market matures, the contribution from voice and M-PESA is expected to grow alongside data services.
Q: Are there any interim dividends announced for the half-year, and how does the FX impact from Ethiopia affect this?
A: Dilip Pal confirmed that Safaricom follows a rhythm of interim and final dividends, with interim dividends typically discussed around February. The impact of foreign exchange depreciation in Ethiopia is included in the financials, but hyperinflationary adjustments are excluded from dividend calculations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
