I note a 13% increase in revenue despite price wars meaning Safaricom is making more from MPESA customers (grew 45%)

Churn (people leaving) has grown slightly by 3%


But what would justify the 25.3% increase in operating expenses, or the 23.2% increase in administrative expenses? Is this the cuplrit that led to...

--12.9% decline in profit before tax
--12.9% erosion of earnings per share


At a P/E of 11.5 price direction - stagnant very slight movement

Its clear the operating expenses are the culprit; voice revenue after such a brutal voice tariff war, went down only 1.7%. Clearly after tariff reduction, voice volumes doubled to achieve nearly the same revenue.

I think the recent re-organisation which was made to make the operations leaner was not factored here so going forward this cost cuts will make the cake more fat.

The biggest plus in this results is the reduction of contribution of Voice from 76% to 67%

Dividend yields are much lower than the 76% & 60% you are quoting.

@hisah, Check your math!

I have especially focused on the results for the 2nd half as I believe this gives an indication of the trend that we could infer from the results, "ceteris paribus."

H2 PAT was Kshs 5.349 B in 2010-11 against 7.72 B in H1 2010-11 and Kshs 8.52 B in H2 2009-10. Thus H2 2010-11 dropped by 29.55% against H1 2010-11 and 36.13% when compared to H2 2009-10.

This clearly indicates a steady decline in profitability for the last 18 months. Hopefully, this can be arrested but I am not really hopeful at this juncture unless Airtel/CCK can be made to behave!!!!.

DISCLAIMER: I STILL HAVE MY 100 SHARES IN SAFARICOM.

Analysis and views on the Safaricom's results.

LINK:EXPENSES EAT UP SAFARICOM'S PROFITS

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 http://contrarianinvesti...1-earnings-analysis.html

On twitter @KuiKinyanjui
Strange how there was no mention of market share in the #Safaricom results...


So what are Wazuans guestimates?
Subscriber market share Safaricom 75% allowing for slight decline from q1 2011 CCK sector report

The tricky one is revenue market share. I guestimate that Safaricom makes 3/= on average per call. But Airtel, and everyone else for that matter, makes 30% less on average from the same subscriber. So is it likely Safaricom could have a revenue market share of 75 + (25 * 30%) = 82.5%?