Airtel’s share of the market stood at 10.9 per cent in the year to June while Essar had 7.7 per cent, according to the latest CCK data. Safaricom’s voice market based on subscribers stood at 64 per cent in June
Safaricom’s decision to raise its calling charges last October is expected to lift its first half profits set to be unveiled this afternoon in a performance analysts believe will boost its share price at the Nairobi bourse.
Analysts at Standard Investment Bank argued that the telecom operator’s profit could rise by triple digits on the strength of the tariff increment and lower base in the half ended September last year.
The company’s net profit for the six months to September declined 47.4 per cent to stand at Sh4 billion on higher operating costs and reduced revenues from voice calls, prompting the operator to increase its tariffs by an average of 25 per cent in October last year.
This means this half will be based on a higher tariff of four shillings a minute compared to a similar half last year that was grounded on call rates of three shillings a minute.
“On the backdrop of a low base created by the 1H12 numbers, we estimate 1H13 EPS to climb 120.5 per cent year on year,” said Standard Investment Bank in a research brief prepared for its clients ahead of the company’s half year report.
“Even as the whole sector struggles from a self-inflicted tariff war, we think Safaricom is in very good shape especially supported by revenues from its financial services division (M-Pesa) as well as a strong recovery in voice revenue following a decision to increase calling rates in October 2011.”
Standard Investment Bank expects Safaricom’s revenues to increase 21.4 per cent to Sh60.2 billion in the half ended September.
Analysts at Kestrel Capital echoed these comments in a performance that is likely to shape the firm’s share price that has gained 45 per cent over the past year to the current price of Sh4.45—which is still below its 2008 IPO price of five shillings.
Safaricom is racing to grow its share of revenues from data as it gears up to meet the growing data demand from smartphone users with multibillion shilling investments in technology and infrastructure.
Kenya has many lower-end users who only make calls and send text messages, but its increasingly young and tech-savvy population is buying higher-end handsets that are increasing data usage across the continent.
The analysts reckon that the first half profit will lift Safaricom’s full year earnings with Standard Investment Bank forecasting that it will lift its dividend to Sh0.28 from last year’s Sh0.22, reflecting an increment of 27.2 per cent. Safaricom controls 80.7 per cent market share in terms of voice traffic — a pointer to the fact that the price war, which halved airtime costs compared to August 2010, has not shifted the players’ stakes significantly.
Airtel’s share of the market stood at 10.9 per cent in the year to June while Essar had 7.7 per cent, according to the latest CCK data. Safaricom’s voice market based on subscribers stood at 64 per cent in June [email protected]
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Note: The results are not exact but very close to the actual.
