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Safaricom in Ethiopia
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Monk
#1 Posted : Monday, July 29, 2024 3:43:46 PM
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Joined: 7/1/2009
Posts: 256
Looks like Safaricom will hurt from this news.

https://shega.co/post/et...y-of-floating-currency/

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kawi254
#2 Posted : Tuesday, July 30, 2024 1:07:05 PM
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Monk wrote:
Looks like Safaricom will hurt from this news.

https://shega.co/post/et...y-of-floating-currency/



On the contrary, they benefit because a lot of investment is waiting for the true value of birr to be realized. It is no use making money in birr and you can't get dollars out of the country.
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Monk
#3 Posted : Wednesday, July 31, 2024 3:46:27 PM
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Posts: 256
kawi254 wrote:
Monk wrote:
Looks like Safaricom will hurt from this news.

https://shega.co/post/et...y-of-floating-currency/



On the contrary, they benefit because a lot of investment is waiting for the true value of birr to be realized. It is no use making money in birr and you can't get dollars out of the country.


In the long term, yes they'll benefit. In the short term though, it will be a repeat of what happened to KCB & COOP in SS.
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DtheK
#4 Posted : Friday, August 02, 2024 5:35:54 PM
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In the long term it will be a positive.
In the short term being that saf Ethiopia is highly indebted in Birr won't they have a hyper inflationary gain thing?
Don't forget IFC is invested in saf Ethiopia and is looking to lend them a couple of tens of Billions KES (in USD of course), they'd favor and influence for a system that makes it easy for saf Ethiopia to pay them back and receive dividends in future.
For saf it pays to have friends/share holders in high places.
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Ericsson
#5 Posted : Tuesday, August 06, 2024 7:56:00 AM
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Joined: 12/4/2009
Posts: 10,671
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DtheK wrote:
In the long term it will be a positive.
In the short term being that saf Ethiopia is highly indebted in Birr won't they have a hyper inflationary gain thing?
Don't forget IFC is invested in saf Ethiopia and is looking to lend them a couple of tens of Billions KES (in USD of course), they'd favor and influence for a system that makes it easy for saf Ethiopia to pay them back and receive dividends in future.
For saf it pays to have friends/share holders in high places.



Will Safaricom Ethiopia be able to pay all that debt?
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Ericsson
#6 Posted : Tuesday, August 06, 2024 7:58:26 AM
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Joined: 12/4/2009
Posts: 10,671
Location: NAIROBI
Monk wrote:
kawi254 wrote:
Monk wrote:
Looks like Safaricom will hurt from this news.

https://shega.co/post/et...y-of-floating-currency/



On the contrary, they benefit because a lot of investment is waiting for the true value of birr to be realized. It is no use making money in birr and you can't get dollars out of the country.


In the long term, yes they'll benefit. In the short term though, it will be a repeat of what happened to KCB & COOP in SS.


Not really.
KCB and Co-op venture in SS wasn't debt funded.
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Ebenyo
#7 Posted : Tuesday, November 05, 2024 1:24:47 PM
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Half year results announcement is on Thursday 7th.
Towards the goal of financial freedom
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My 2 cents
#8 Posted : Thursday, November 07, 2024 12:22:33 PM
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Joined: 6/2/2010
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No interim dividends. Ethiopia has disappointed.
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VituVingiSana
#9 Posted : Friday, November 08, 2024 3:23:18 AM
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Joined: 1/3/2007
Posts: 18,095
Location: Nairobi
One should look at Ethiopia with a very long lens (time frame).

The Birr needs to find its level and it seems, unless there is some very good news for Ethiopia, it will depreciate further.

Safaricom is very small in Ethiopia. It is like the Telkom (not even Airtel) of Ethiopia BUT it does not have the legacy issues of Ethiotel. Lessons from Kenya can be applied to Ethiopia but these need to be localized.

Focus of Saf ET is to GROW the numbers to benefit from network effects. MPesa is where I see Ethiopians will slowly favor Saf over Ethiotel. Saf knows how to monetize MPesa in the private sector.

Where Saf will have a long hard climbs, unlike Kenya, is linking Govt of Ethiopia services as Ethiotel will likely be favored just as Saf is favored in KE over Airtel for GoK services.

This is not a post to say BUY SAF or SELL SAF but about Saf ET's challenges and opportunities.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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watesh
#10 Posted : Friday, November 08, 2024 12:32:46 PM
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Joined: 8/10/2014
Posts: 966
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VituVingiSana wrote:
One should look at Ethiopia with a very long lens (time frame).

The Birr needs to find its level and it seems, unless there is some very good news for Ethiopia, it will depreciate further.

Safaricom is very small in Ethiopia. It is like the Telkom (not even Airtel) of Ethiopia BUT it does not have the legacy issues of Ethiotel. Lessons from Kenya can be applied to Ethiopia but these need to be localized.

Focus of Saf ET is to GROW the numbers to benefit from network effects. MPesa is where I see Ethiopians will slowly favor Saf over Ethiotel. Saf knows how to monetize MPesa in the private sector.

Where Saf will have a long hard climbs, unlike Kenya, is linking Govt of Ethiopia services as Ethiotel will likely be favored just as Saf is favored in KE over Airtel for GoK services.

This is not a post to say BUY SAF or SELL SAF but about Saf ET's challenges and opportunities.


I fully agree. It's a tricky one for investors. Safcom Kenya is pumping proper numbers but S. Ethiopia is sucking all the free cash flow from it hence dividends are likely to be stagnant. Safcom E needs to grow its ARPU to Ksh300 and hit 20 million customers but birr depreciation slows down ARPU momentum when converted to ksh. To get here faster they need more customers using Safcom as the primary simcard.

Some positive things from the HY is Safcom E's gross profit has turned green, voice usage is kicking in and numbers are pumping up. As an investor, I am hoping it drops below 15 and I can start nibbling. Safcom K alone has the potential to pay a dividend of 1.9 and Saf E won't be paying anything for at least the next 5 years. My target will be to hold till P&L breakeven for Safcom E. This one needs time though so the entry price is crucial. The bad news from the currency depreciation might create a nice entry opportunity.
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Ericsson
#11 Posted : Friday, November 08, 2024 11:37:56 PM
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Joined: 12/4/2009
Posts: 10,671
Location: NAIROBI
My 2 cents wrote:
No interim dividends. Ethiopia has disappointed.


Interim dividend is usually announced in February
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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VituVingiSana
#12 Posted : Saturday, November 09, 2024 8:57:52 PM
Rank: Chief


Joined: 1/3/2007
Posts: 18,095
Location: Nairobi
watesh wrote:
VituVingiSana wrote:
One should look at Ethiopia with a very long lens (time frame).

The Birr needs to find its level and it seems, unless there is some very good news for Ethiopia, it will depreciate further.

Safaricom is very small in Ethiopia. It is like the Telkom (not even Airtel) of Ethiopia BUT it does not have the legacy issues of Ethiotel. Lessons from Kenya can be applied to Ethiopia but these need to be localized.

Focus of Saf ET is to GROW the numbers to benefit from network effects. MPesa is where I see Ethiopians will slowly favor Saf over Ethiotel. Saf knows how to monetize MPesa in the private sector.

Where Saf will have a long hard climbs, unlike Kenya, is linking Govt of Ethiopia services as Ethiotel will likely be favored just as Saf is favored in KE over Airtel for GoK services.

This is not a post to say BUY SAF or SELL SAF but about Saf ET's challenges and opportunities.


I fully agree. It's a tricky one for investors. Safcom Kenya is pumping proper numbers but S. Ethiopia is sucking all the free cash flow from it hence dividends are likely to be stagnant. Safcom E needs to grow its ARPU to Ksh300 and hit 20 million customers but birr depreciation slows down ARPU momentum when converted to ksh. To get here faster they need more customers using Safcom as the primary simcard.

Some positive things from the HY is Safcom E's gross profit has turned green, voice usage is kicking in and numbers are pumping up. As an investor, I am hoping it drops below 15 and I can start nibbling. Safcom K alone has the potential to pay a dividend of 1.9 and Saf E won't be paying anything for at least the next 5 years. My target will be to hold till P&L breakeven for Safcom E. This one needs time though so the entry price is crucial. The bad news from the currency depreciation might create a nice entry opportunity.
Saf K does not use its cash to support Saf E anymore though there may be some expenses eg salaries for staff supporting Saf E. Also interest costs on the funds invested in Saf E.

These are not huge vs Saf K's income.

Yes, this is for the long-term. A good entry point is critical.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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watesh
#13 Posted : Sunday, November 10, 2024 9:23:35 AM
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Joined: 8/10/2014
Posts: 966
Location: Kenya
VituVingiSana wrote:
watesh wrote:
VituVingiSana wrote:
One should look at Ethiopia with a very long lens (time frame).

The Birr needs to find its level and it seems, unless there is some very good news for Ethiopia, it will depreciate further.

Safaricom is very small in Ethiopia. It is like the Telkom (not even Airtel) of Ethiopia BUT it does not have the legacy issues of Ethiotel. Lessons from Kenya can be applied to Ethiopia but these need to be localized.

Focus of Saf ET is to GROW the numbers to benefit from network effects. MPesa is where I see Ethiopians will slowly favor Saf over Ethiotel. Saf knows how to monetize MPesa in the private sector.

Where Saf will have a long hard climbs, unlike Kenya, is linking Govt of Ethiopia services as Ethiotel will likely be favored just as Saf is favored in KE over Airtel for GoK services.

This is not a post to say BUY SAF or SELL SAF but about Saf ET's challenges and opportunities.


I fully agree. It's a tricky one for investors. Safcom Kenya is pumping proper numbers but S. Ethiopia is sucking all the free cash flow from it hence dividends are likely to be stagnant. Safcom E needs to grow its ARPU to Ksh300 and hit 20 million customers but birr depreciation slows down ARPU momentum when converted to ksh. To get here faster they need more customers using Safcom as the primary simcard.

Some positive things from the HY is Safcom E's gross profit has turned green, voice usage is kicking in and numbers are pumping up. As an investor, I am hoping it drops below 15 and I can start nibbling. Safcom K alone has the potential to pay a dividend of 1.9 and Saf E won't be paying anything for at least the next 5 years. My target will be to hold till P&L breakeven for Safcom E. This one needs time though so the entry price is crucial. The bad news from the currency depreciation might create a nice entry opportunity.
Saf K does not use its cash to support Saf E anymore though there may be some expenses eg salaries for staff supporting Saf E. Also interest costs on the funds invested in Saf E.

These are not huge vs Saf K's income.

Yes, this is for the long-term. A good entry point is critical.


Safaricom Ethiopia has 28bn in operating costs against revenues of 3bn (HY25). In addition, they have a Capex spend of ksh30bn in Ethiopia. So where is the money coming from? Surely Safcom Kenya is bankrolling at least half of these costs and will continue to do so till break even.
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VituVingiSana
#14 Posted : Sunday, November 10, 2024 5:52:57 PM
Rank: Chief


Joined: 1/3/2007
Posts: 18,095
Location: Nairobi
watesh wrote:
VituVingiSana wrote:
watesh wrote:
VituVingiSana wrote:
One should look at Ethiopia with a very long lens (time frame).

The Birr needs to find its level and it seems, unless there is some very good news for Ethiopia, it will depreciate further.

Safaricom is very small in Ethiopia. It is like the Telkom (not even Airtel) of Ethiopia BUT it does not have the legacy issues of Ethiotel. Lessons from Kenya can be applied to Ethiopia but these need to be localized.

Focus of Saf ET is to GROW the numbers to benefit from network effects. MPesa is where I see Ethiopians will slowly favor Saf over Ethiotel. Saf knows how to monetize MPesa in the private sector.

Where Saf will have a long hard climbs, unlike Kenya, is linking Govt of Ethiopia services as Ethiotel will likely be favored just as Saf is favored in KE over Airtel for GoK services.

This is not a post to say BUY SAF or SELL SAF but about Saf ET's challenges and opportunities.


I fully agree. It's a tricky one for investors. Safcom Kenya is pumping proper numbers but S. Ethiopia is sucking all the free cash flow from it hence dividends are likely to be stagnant. Safcom E needs to grow its ARPU to Ksh300 and hit 20 million customers but birr depreciation slows down ARPU momentum when converted to ksh. To get here faster they need more customers using Safcom as the primary simcard.

Some positive things from the HY is Safcom E's gross profit has turned green, voice usage is kicking in and numbers are pumping up. As an investor, I am hoping it drops below 15 and I can start nibbling. Safcom K alone has the potential to pay a dividend of 1.9 and Saf E won't be paying anything for at least the next 5 years. My target will be to hold till P&L breakeven for Safcom E. This one needs time though so the entry price is crucial. The bad news from the currency depreciation might create a nice entry opportunity.
Saf K does not use its cash to support Saf E anymore though there may be some expenses eg salaries for staff supporting Saf E. Also interest costs on the funds invested in Saf E.

These are not huge vs Saf K's income.

Yes, this is for the long-term. A good entry point is critical.


Safaricom Ethiopia has 28bn in operating costs against revenues of 3bn (HY25). In addition, they have a Capex spend of ksh30bn in Ethiopia. So where is the money coming from? Surely Safcom Kenya is bankrolling at least half of these costs and will continue to do so till break even.
Most CapEx is funded by initial investment and foreign loans including vendor financing. They are borrowing from local banks for local expenses.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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