Safaricom is slated to announce its Half Year 2016 results on Thursday, 5th November 2015. The Telco has in recent times increased its non-voice revenues with data and M-Pesa contributing significantly to the companies earnings and from that end, we can expect stellar results. However, the slowing down of the economy, stagnation of the mobile money markets are factors likely to affect the numbers.
So What can we Expect in the Safaricom Results?
Non-Voice Revenues: Last year, Safaricom posted a pretax profit rose to Kshs. 21.1 billion over the same period, attributed to growth in non-voice revenue from both M-Pesa and Data services. Below is a breakdown of some of the things we shall look forward to.
As of HY ’15, Safaricom had 139,600 merchants registered on Lipa-Na-M-Pesa service and we expect the number to have grown further since. Over the last half year, the service has been included in government payments via eCitizen platform. We also saw the increased use of the M-Pesa platform to offer micro-loans as was with the launch of the KCB M-Pesa account which, has managed to register 4 million users with Kshs. 4.2 Billion issued to users so far. Commercial Bank of Africa also runs M-Shwari on the M-Pesa platform that offers mobile loans to users. We shall be looking forward to an update on the impact of these on M-Pesa revenues.
Other interesting developments to take place include Safaricom’s relocation of M-Pesa servers to Kenya from Germany at a cost of $75 Million, which has seen customers enjoy faster transaction time as well as minimal downtime. The relocation has also allowed for the release of the M-Pesa API meaning developers can plug into the platform further increasing payments. This is especially taking place on a Business to Business platform.
I am of the opinion that M-Pesa which currently has 23 Million, has created a large base already and growth in number of subscribers added might not be as large as it has been before. It is now upon Safaricom to seek to add value to M-Pesa users with other services to keep them to the platform.
As of HY ’15, Safaricom recorded Kshs. 8 Billion in revenues from its data offering. Since, Safaricom introduced the Safaricom Big Box, a set top box that allows the user to access the internet, reviewed its data prices downwards and rolled out its 4G network into the market. The telco also bolstered its 3G network capability owing to the acquiring Essar Telecom’s Yu spectrum. These investments may have meaningful gains which we shall look forward to seeing the numbers. We shall also be on the lookout for updates on Safaricoms fixed data offerings including Fiber to Home and Wimax. Other factors likely to lead to an increase in data revenues include increase in smartphone uptake. As of last year, the number of smartphones on the network stood at 4.3 Million with 3.1 Million being 3G-enabled. Owing to data from the Communications Authority of Kenya, the number of smartphone users and internet users has grown rapidly in the last one year, which we believe will have an impact on the telcos numbers.
SMS revenues have been on the decline owing to the growth of over-the-top services such as Whatsapp and Telegram. Safaricom has in recent times ran campaigns such as the ongoing Shangwe Mtaani as well as offered VAS services to PRSs but this has not tamed the bleeding of SMS. As of HY ’15, Safaricom registered a 12.9% growth in SMS revenue owing to growth in 30 day active SMS users to 12.37 million as well as increase in active SMS bundle users to 3.50 million.
Voice Revenue: As of HY ’15, Safaricom registered 6.4 % growth in voice service revenue as well as a 4.9 % growth in customers. Since, the number of customers on the network based on CA’s report. However, it is prudent to note that the growth of Over-the-top service means voice revenues will also be impacted. Services such as Okoa Jahazi that allow the user to access emergency airtime top ups. We shall be looking to see if the same have an impact on the growth of voice revenues. Other factors involved include international calls and growth of the prepay and postpay offerings.