- Revenue: KES335 billion, a 13.4% year-on-year growth.
- EBIT (Kenya): KES140 billion, a 20% year-over-year growth.
- Group EBIT: KES94.9 billion, a 3.5% year-on-year growth.
- EBITDA (Kenya): KES187 billion, a 16.6% growth.
- Net Income (Kenya): KES85 billion, a 13.7% growth.
- Operating Free Cash Flow: KES129 billion.
- M-PESA Revenue: 19.4% growth, contributing 42.4% of service revenue.
- Mobile Data Revenue: 18.2% year-over-year growth.
- Fixed Revenue: 12% year-over-year growth.
- Voice Revenue: Declined by 1.7% year-over-year.
- CapEx (Group): KES93.5 billion.
- CapEx (Kenya): KES52 billion to KES55 billion (FY25 guidance).
- CapEx (Ethiopia): KES21 billion to KES24 billion (FY25 guidance).
- Group EBIT (FY25 Guidance): KES103 billion to KES109 billion.
- Group Net Income (excluding minority interest): KES63 billion, a 1.2% year-on-year growth.
- Service Revenue (Kenya): 11.7% growth.
- Service Revenue (Group): 13.4% growth.
- Customer Growth: 4.6% year-over-year, reaching 34.6 million customers.
- Transaction Volumes (M-PESA): 33.9% increase.
- Transaction Value (M-PESA): KES40.2 trillion.
- Chargeable Transactions (M-PESA): 52.5% growth in value, 45.6% growth in volume.
- Smartphone Users: 13% year-over-year growth, reaching 22.9 million.
- 4G Devices Added: 3.6 million during the financial year.
- 4G Device Production: 300,000 units from the device assembly plant.
- Active Customers (Ethiopia): 4.4 million 90-day active customers.
- Mobile Data Usage (Ethiopia): 4.3 GB per chargeable data subscriber.
- Revenue (Ethiopia): KES5.4 billion.
- CapEx Investment (Ethiopia): USD853 million cumulative.
- Funding (Ethiopia): USD1.86 billion total, with USD1.6 billion in equity.
Release Date: May 09, 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 double-digit growth in service revenue, driven by strong performance in M-PESA and mobile data segments.
- The company achieved a significant milestone by hitting $1 billion in earnings before interest and taxes (EBIT) in Kenya.
- Safaricom PLC (NAI:SCOM) has made substantial progress in its expansion into Ethiopia, with a growing customer base and improved network coverage.
- The company has successfully leveraged big data and analytics to enhance customer segmentation and service delivery.
- Safaricom PLC (NAI:SCOM) continues to invest in sustainability initiatives, including converting 23% of its sites to solar power and planting 1.5 million trees.
Negative Points
- The operating environment in Kenya remains challenging due to high inflation, rising energy costs, and a weakening Kenyan shilling.
- The company faced a 40% year-over-year increase in energy costs, impacting overall operating expenses.
- Voice and messaging revenue continues to decline, although mitigated by growth in mobile data revenue.
- The Ethiopia expansion, while promising, still requires significant investment and has yet to break even, contributing to overall group losses.
- Interest costs have risen by over 45% year-over-year due to higher interest rates, impacting financial performance.
Q & A Highlights
Q: What impact will the reduced mobile termination rates have on Safaricom Ethiopia as you scale and increase your customer base?
A: Wim Vanhelleputte, CEO of Safaricom Telecommunications Ethiopia, explained that the reduction in mobile termination rates from 0.31 bps to 0.23 bps, effective from May 1, will make Safaricom Ethiopia more competitive in terms of voice pricing. This reduction allows the company to offer more competitive voice packages, which should help gain market share and reduce costs.
Q: What is your view on the need for further cash injection in Ethiopia for its CapEx and other cash requirements? When do you expect this business to be cash breakeven?
A: Dilip Pal, CFO of Safaricom Plc, stated that the peak investment phase in Ethiopia is expected to continue for the next three years. The company anticipates reaching EBITDA breakeven by FY26 and cash breakeven shortly thereafter. The total CapEx investment for the first five years has been revised down to $1 billion to $1.3 billion from the initial $1.5 billion to $2 billion.
Q: What are your plans to expand 5G adoption?
A: Peter Ndegwa, CEO of Safaricom Plc, mentioned that the company plans to accelerate 5G deployment, with significant additions to the existing 770 sites in the new financial year. This expansion is included in the CapEx guidance of KES52 billion to KES55 billion for Kenya. The focus will be on ensuring 5G readiness as devices become more affordable and using 5G for fixed wireless solutions where appropriate.
Q: How do you intend to elevate and accelerate the use of AI as you transition into a tech company?
A: Peter Ndegwa highlighted that Safaricom has established a center of excellence with 40 data scientists and engineers to leverage AI for various applications, such as fraud detection and customer service. The company aims to democratize AI usage across all operations and enhance internal capabilities, ensuring all employees, including leadership, are equipped with AI skills.
Q: What is the outlook for Safaricom's financial performance in FY25?
A: Peter Ndegwa provided guidance that for FY25, Safaricom expects Kenya's EBIT to range between KES149 billion to KES152 billion, with Ethiopia's EBIT loss projected between KES46 billion to KES43 billion. Group EBIT is expected to be between KES103 billion to KES109 billion. CapEx for Kenya is projected at KES52 billion to KES55 billion, and for Ethiopia, KES21 billion to KES24 billion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
