I attended Wednesday’s Safaricom’s earnings release. Safaricom has a market capitalisation of 810.308b out of a total market capitalisation of Sh1,937 trillion which equates to 41.833% of the total market cap of the Nairobi Securities Exchange.
Its importance cannot be gainsaid and in fact if you stripped out Safaricom, the Nairobi Securities Index performance would be very sickly indeed. Safaricom has done some serious heavy-lifting.
CEO Bob Collymore has presided over a golden age of shareholder value creation, presiding over a +322.68% share price appreciation during his tenure and that is juiced ‘’bigly’’ when you factor in the dividends that Safaricom has paid out over that period.
In fact, I know Collymore is big on the sustainability agenda, but he is a CEO who can afford to be because shareholder returns rank in the top 1 percentile in the world.
This is why Safaricom is on the radar of practically every international investor in a way few sub-Saharan Africa shares are.
I am evangelical about Safaricom because they have bridged Kenya inc into the new 21st information century. I recall a time when there were 15,000 landlines.
Today, you can connect with 7.5 billion people, you can plug yourself into the real-time via mobile data and you can transact via M-Pesa.
Safaricom has always bet big on this information highway, and they have consistently been proven correct.
There was a lot of debate about the regulator, the Communications Authority of Kenya, and the demand that M-PESA be spun off.
I said to the Financial Times that I doubted that “the government is going to kill the goose that lays golden eggs”.
“It’s unfair to say M-Pesa is poorly regulated,” I had said. “Customers’ IDs are there and the money is in a traceable system.”
Safaricom served up a sparkling set of earnings. Full-year revenue accelerated +14.807% to top Sh200b, and Safaricom became the first East African company to report a FY EBITDA of over $1b.
The board recommended the dividend be increased by 27 per cent to Sh0.97 per share. There are few companies anywhere in the world who can deliver that kind of dividend growth anywhere and that dividend increase is a signal that will get through the noise.
FY M-Pesa revenue grew 32 per cent to 55bn and accounted for 25.8 per cent of the company’s total revenue. That’s impressive and I think M-Pesa is deeply entrenched, so I expect that curve to maintain its current trajectory.
FY mobile data revenue surged +38.5% to 29.29b and what we know is that in SSA the future is mobile. Data usage is set expand exponentially as more Kenyans own a smartphone and connect to the 21st century.