Safaricom Reports
M-Pesa, Fuliza revenues skyrocket
๐ Welcome to The Mwango Weekly by Mwango Capital, a newsletter that brings you a succinct summary of key capital markets and business news items from East Africa.This week, we cover Safaricom FY 22 and banks' Q1 2022 results.First off, enjoy our weekly business news in memes brought to you by DTB Kenya:
Safaricom FY 2022 Results
M-Pesa Grosses $1B: M-Pesa revenue grew 30.3% YoY to reach KES 107.69B, contributing 36.1% of the KES 298B total revenue. Transaction value rose 34% higher to KES 29.55T.
Fuliza Skyrockets: Disbursements through Fuliza rose 43.11% to KES 502.6B with revenues from the service growing 31% to KES 5.94B. Disbursements from KCB-Mpesa and Mshwari fell 9.4% and 8.9% to KES 46.1B and 6.1B respectively. Their revenues also fell in tandem by 18.7% and 13.4% to KES 0.7B and KES 1.9B.
Dividends Up 9%: Profit Before Tax grew 9.2% to KES 102.2B, while Net Profit marginally contracted by 1.7% to KES 67.4B. Safaricom is set to pay out KES 1.39 per share in dividends [FY 21: 1.37] - a 79.8% payout ratio.
5G Push: The telco has been allocated a 60MHz spectrum in the 2500 - 2690MHz band whose use was hitherto restricted to the government. The costs are undisclosed but expected to exceed the KES 2.5B paid for the 4G spectrum in 2017.
Ethiopia Operations:
Debt License Financing: Latest disclosures show that Safaricom sought a $400M facility to pay for the telecommunications license. Originally a one-year bridge facility, it has been reviewed and decomposed to a $120M 5-year and a $280M 7-year facility.
Go for Launch: Commercial operations are set to launch this year. The firm has put in place a Board of Directors, executive teams, and over 305 staff and is targeting to reach 1,000 staff in FY 2023. The firm has imported equipment worth $390M, set up 2 data centers, and performed network tests successfully.
Capital Expenditure: Safaricom has outlined $1.5 - 2B in CapEx for the next 5 years in Ethiopia and expects to break even at a 40% EBITDA margin in Year 4 of operations. Safaricom expended KES 10.4B in CapEx in Ethiopia in FY 22.
Equity Piles on G-Secs
Balance Sheet Growth: Customer deposits grew 14% YoY to KES 900.9B while total assets increased by 19% to reach KES 1.2T.
Asset Allocation: The loan book grew 27.8% YoY to KES 623.5B. Securities holdings increased by 50.3% to KES 389.4B, around 30.6% of the balance sheet. Interest income from securities rose 58.7% over the year while that from loans and advances was up 20.9%.
Asset Quality: Provisions grew 42.3% YoY to KES 1.8B - albeit falling 69% QoQ in what is a continuing deprovisioning trend as Covid risks recede. Net NPLs dropped 286% YoY to KES 20.2B.
Bottom Line: Net Interest Income rose by 30.5% to KES 19.3B, contributing 61.8% to Total Operating Income. Profit Before Tax increased by 30.5% to KES 15.2B while Net Income was up 35.9% to KES 11.8B.
Equity - IFC: Equity Group and the International Finance Corporation have signed a partnership agreement in support of Africaโs sustainable development through supporting MSMEs and climate-smart businesses. IFC is Equityโs second-largest shareholder and largest holder of the Groupโs borrowed funds.
Stanbic Maintains Growth
Highlights: Loans and advances grew 30.7% to KES 206.4B while deposits from customers were up 3.7% to KES 235.1B. Total assets were up 4.4% to KES 331B.
OPEX: Provisioning reduced by 19.3%, continuing with the trend from the previous financial year. Net NPLs rose by 5.1% to KES 10B. Operating Expenses were up 13.4% to KES 3.8B.
Profitability: Total Operating Income came in 13.5% higher YoY to KES 6.7B. Profit Before Tax edged up 13.6% to KES 2.9B to bring Net Profit to KES 2.1B - a 12% YoY growth.
Find the results here.
HF Turns a Profit
Marginal Growth: Total assets grew 0.6% to reach KES 54.3B. Customer deposits were up 3.1% YoY to KES 38.3B while the loan book shrank by 2.6% to reach KES 34.8B.ย
Rebound to Profits: Total Interest Income edged up by 1% to KES 1.02B; while provisions came in down 24.3% to reach KES 56.4M. The firm rebounded to a Profit position of KES 34.2M from a KES 593.3M loss at the end of Q4 2021. EPS came in at KES 0.36 [Mar 2021: -1.99].
Find the results here.
What Else Happened this Week
๐ฐ Transcentury Rights Issue: The Capital Markets Authority has granted Transcentury approval to undertake a rights issue on the basis of 5 new ordinary shares for 1 existing share. The KES 4.6B proceeds have been earmarked for recapitalization. [The Trading Room]
โก Tariff Negotiations: Kenya Power is set to pay KES 140.75M in legal fees in the push for a renegotiation of PPA terms. Kenya law firm, NBMA Advocates, is set to earn KES 16.77M while UK's Michael Sullivan will earn KES 123.97M. [Business Daily]
๐ Airtel Africa FY21 Results: Revenue grew 20.6% to $4.7B with operating profit up 26.8% to $1.5B. Net income grew 82% to $755M. Basic EPS was $0.168 [FY 20: $0.09] while the dividend for FY 21 was at $0.04 per share - a 23.8% payout ratio. [Mwango Capital]
โ๏ธ Sasini HY22 Results: Revenue came in 65.3% higher YoY at KES 3.3B. Profit Before Tax grew 203.6% to KES 582M while Net Income leaped 244.8% to KES 421.3M. EPS was KES 1.98 [2021: KES 0.52]. The firm declared a KES 1 interim dividend. [Mwango Capital]
๐ Undersubscribed Bonds: The National Treasury sought to raise KES 60B through a new 10-year and a reopened 25-year bond. Interest rates of the accepted bids came in at 13.49% and 13.97% respectively and accepted bids were KES 31.7B out of KES 43.1B received bids. [Mwango Capital]
๐ต Laikipia Infrastructure Bond: The Cabinet approved the Countyโs KES 1.16B Infrastructure Bond plan, making it the maiden County to launch a municipal bond. The bond is about 116% of the Countyโs projected KES 1.006B annual own-source revenue for the year ending Jun 2022. [Julians Amboko]
Interest Rates Watch
Rwanda: The MPC retained its key lending rate at 5%. In Q1 2022, headline inflation rose to 5.9% from 1.5%, occasioned by increasing prices for processed-food items, housing-related prices, restaurant and hotels' food and drinks, and purchases of vehicles.
Chart of the Week
