Safaricom Plc (NSE: SCOM) FY20 Earnings Note
Safaricom Plc (NSE: SCOM) released FY20 results reporting a 14.3% y/y growth in headline Earnings per Share (EPS) to KES 1.78, in line with our expected EPS of KES 1.75. The strong performance was primarily attributed to 12.1% y/y rise in Mobile data revenue (8.5% y/y expected) and 12.6% y/y rise in M-PESA revenue (16.7% y/y expected). Consequently, total service revenue grew modestly by 4.8% y/y, supplemented by fixed service revenue (+10.7% y/y) and back-pedalled by negative growth (as expected) in voice (-1.4% y/y, -0.8% estimated) and SMS revenue (-12.3% y/y, -13.5% y/y estimated). Efficiencies were the major driver of bottom-line growth with operating costs down 11.3% y/y driving operating profit (EBIT) a sturdy 14.1% y/y. As expected, a dividend of KES 1.40 per share has been recommended to shareholders on register as at 31st July 2020 to be paid by 1st November 2020. We maintain our HOLD rating at a fair value estimate of KES 33.25.
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