Q1 was a solid quarter for the Sub-Saharan African operators, especially from a top line perspective. Airtel Africa continued to outperform peers overall. We continue to think that fundamentals for AAF and MTN are strong and deserve more attention. Valuations are compelling too.
Q3 was a decent quarter for Sub-Saharan African (SSA) operators. Fundamentals remain strong. We have updated forecasts post Q3 results, and our recommendations and target prices remain unchanged, except for Safaricom. AAF remains our preferred play in Africa.
Safaricom reported a solid set of 1HFY24 results today. Service revenue growth accelerated driven by a solid performance from M-PESA and mobile data. EBITDA growth slowed but remained robust. The Group has lifted its EBIT guidance for Kenya this year (+KHsh 12bn), it also lifted capex expectations given the KES depreciation but by a smaller degree (+KHsh 3bn). FY24 guidance for Ethiopia is unchanged, so was mid-term guidance for capex and EBITDA.
2022 was a tougher year than we expected for African Telcos & Towers. While fundamentals remained generally good, the war in Ukraine and its impact especially on fuel prices as well as other macro pressures created some strong headwinds. While some of these are perhaps inflecting, we think in many ways 2023 will remain a tough environment, with headwinds in South Africa and the Nigerian election.
Safaricom reported its 1HFY23 results today. Service revenue growth slowed on slower M-PESA revenue during the Election Year. EBITDA declined YoY on higher M-PESA commissions and handset costs. On balance, the Group’s FY23 EBIT guidance remains intact, with the KShs 8bn downgrade in Kenyan EBIT target being offset by the KShs 8bn upgrade in its Ethiopian unit. Capex guidance remained at KShs 100-108bn. We highlight below the key takeaways from the results and the outlook.
Safaricom has reported a very strong set of results. In particular, growth rates have benefitted significantly from easier comps when P2P transfers were free of charge through the pandemic. The result is that m-Pesa revenues grew 46% y/y, which given it makes up 38% of revenues drove overall service revenue up 17% y/y.
Full Article at IIR has reaffirmed its Recommended rating for PIA after undertaking a review post the appointment of a new Portfolio Manager, Harding Loevner. The full report can be found on the IIR website. On 26 July 2021, Pengana International Equities Limited (PIA) announced a fully franked dividend of 1.35 cents per share for the June quarter. This represents an 8% increase on the March quarter dividend and takes the total dividends declared for FY21 of 5.1 cents per share, fully franked....
Safaricom’s H1 20 performance was in line with our expectations, despite revenues surprising to the downside on voice and SMS while opex surprised to the upside. We note a recovery in mobile data, but remain cautious of further price wars in H2 20. M-Pesa continues to perform strongly despite a 16% decline in revenue from gaming companies. Moreover, Fuliza is on course to beat our previous FY 20 estimate.
Safaricom continues to face competitive pressure in the mobile data and voice segment and has implemented price cuts to protect market share. However, we think the impending merger of Airtel and Telkom may serve to intensify the current competitive environment, and thus we moderate our revenue forecasts. Our stronger margin estimates for M-Pesa offset the perceived pressure on future traditional revenues, therefore we increase our TP from KES27.42 to KES30.04 and maintain our Hold recommendation...
In May 2019, the TASI Materials Index declined 8.4% mom, in-line with the TASI which declined 8.5% mom. We believe the decline is due to lower oil and petrochemical prices. Prices of most petrochemical products declined by up to 8.3% mom. The PP-propane spread declined 2.8% mom to US$603, while the PP-naphtha spread increased 2.8% mom to US$567. The HDPE-propane spread declined 5.9% mom to US$534.
In April 2019, the TASI Materials Index increased 1.6% mom, underperforming the TASI which increased 5.5% mom. Prices of most petrochemical products increased 2%-11% mom. The PP-propane spread and PP-naphtha spreads increased 2.9% mom and 2.4% mom to US$620 and US$551, respectively. The HDPE-propane spread declined 1.0% mom to US$568.
In February 2019, TASI Materials Index remained flat mom, in line with TASI. Prices of key petrochemical products increased, supported by improvement in oil prices. Benzene increased 9.5% mom while HDPE was up 1% mom. Spreads were mixed, PP-propane increased 1.2% mom while PP-naphtha and HDPE-propane declined 2.4% mom and 2.6% mom, respectively.
Airtel and Telkom announced a merger on Friday that will not significantly affect Safaricom, in our view. The combined entity is unlikely to negatively impact Safaricom due to lower investment in network quality as well as low distribution of mobile money agents and merchant partnerships. If anything, the merger may be a net positive, as Safaricom could subsequently push for a revision of proposed dominance regulations due to market consolidation. We maintain our target price of KES27.42 but dow...
Safaricom CEO announced yesterday that Fuliza, an M-Pesa overdraft facility launched on 7 January, has distributed KES1bn to 1mn customers. We believe this implies upside to M-Pesa revenues from increased transactions once scale is achieved on Fuliza. We reiterate our Buy recommendation at a KES27.42 target price, with a 20% ETR, including dividend yield, and we will closely monitor growth in Fuliza.
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