Safaricom FY 2010-11 Earnings Analysis: Buy on Price Dips
2011 vs 2010 Billions Ksh
Key words: at the bottom of the report.
Revenue 95 vs 84
Profit Before Tax 18.3 vs 20.97
EBITDA 35.72 vs 36.60
Profit After Tax 13.16 vs 15.15
EPS 0.33 vs 0.35
PER 12 vs 11.8
Dividend 0.20 vs 0.20
ARPU 439 vs 457-voice ARPU down due to tariff reduction
Commentary
Strong results from Safricom, revenue up by 13% to Ksh 95Billion despite a 60% drop in in voice tariff in 2H of 2010-11, EBITDA margins dropped by only 11% in the same period compared to 11.7% drop in EBTDA margins during the 1H of 2009-10 when voce tariffs dropped by 40% meaning the recent price cuts had little impact on Safaricoms EBITDA. ARUP another important measure only dropped by 4.73% despite a reduction in Voce ARPU ( well compensated by Mpesa and data ARUP UP 13%). The results where outdone by increase in COSTS as Safcom invested heavy into the future I.e. increase n number of shops and base stations.
Way forward
I expect Safcom to beat this years EBITDA of Ksh 36.6 Billion because EBITDA in the 2H was Ksh 16.6 Billion despite the adverse operating conditions and price wars, 16.8 X2=33.6 Billion (FY 2011-12) add to that the parabolic growth of data and Mpesa which is going global, in fact data penetration in Kenya as low as 22% so more room for growth. Voice too has potential only 60% mobile penetration in Kenya.
I expect costs to come down significantly as Mr Bob Collymore implements his 2.0 strategy remember the first thing he did was to chop down on Safcoms exec structure
Entire article here
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