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What MJ told Investors in Europe..
Rank: Member Joined: 9/11/2007 Posts: 62 Location: Nairobi
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Good people,there have been lots of theories and opinions on Safcom including why foreign investors are buying it up right now. Jammo,Mukiha et al have already pointed out on what to look for in a good stock and i will not delve into that. One key thing we dont know yet it is part of any wise investor's plan is,what is a company's future plan?
However i have it on some authority on Safcom's plan. (U are free to call it a theory but only time will tell).
We know this:
1. Safcom is the largest service provider in the region and one of the most profitable.
2. Safcom is the largest money transfer in the region and the largest savings only bank.
What we dont know is:
3. Safcom now wants to become the largest advertising company. How u ask? They are introducing cell broadcasting advertising in this country. Basiclly it means that they will be sending SMS adverts to particular people in a particular location from specific masts in the area. Simply put targeted advertising. A dream to many companies out there wanting to reach clients more effectivey. This is a cash cow and it is very successful in the Europe.
Why would i offer this information here:
I want to buy the safcom share but have no liquidity immediately now so i would rather share this info and if you have money you can make a more informed decision.
This is why European and American investors are investing.
Biggest in Financial,Telecommunication and now Advertising services. Very lucrative share to them i tell you.
IF YOU EVER LOSE,MAKE SURE YOU NEVER LOSE THE LESSON!!
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Rank: Elder Joined: 6/2/2008 Posts: 1,438
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Certainly plausible. However,there are enough TELCOs out there who already do that. They do not however trade at forward PEs of more than 20 which is what some peeps here would have us believe is where Safcom is headed. Incidentally,it will take time for the new business lines to pick up (see how long MPESA took before it started contributing to the bottom line) and hence this will likely be more of a story for the future.
Opportunity calls but few respond.
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Rank: Chief Joined: 1/3/2007 Posts: 18,110 Location: Nairobi
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Interesting... After all safcom knows where we are already with the Cell Broadcast Service... @mwanahisa - Then the time to buy is now... BEFORE the profits are included in the results... This could take 1-2 years to implement... Greedy when others are fearful,Very fearful when others are greedy - to paraphrase WB Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Member Joined: 9/11/2007 Posts: 62 Location: Nairobi
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Mwanahisa,as VVS says the time to buy may be now before the profit is factored into the price.
Besides i personally believe the future is now. I estimate that each MPESA transaction is roughly Kshs. 55 (sending and withdrawing) With those being done per week for 8M subsrcibers the return is not bad.
Further to that the Cell Broadcasting service has began. I have received SMSes and am sure a number of people have. There is no set up cost by the way Mwanahisa so return is on very low investment. The future is Here...
IF YOU EVER LOSE,MAKE SURE YOU NEVER LOSE THE LESSON!!
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Rank: Member Joined: 9/11/2007 Posts: 62 Location: Nairobi
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Oh good people.
I forgot to mention that safaricom is also the biggest ISP in the country over 14M subscribers. While all of them have not started using intrenet but the cost of phones that can access internet is becoming lower.
So we have 4 areas that this company we would love to hate is the largest in...
IF YOU EVER LOSE,MAKE SURE YOU NEVER LOSE THE LESSON!!
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Rank: Elder Joined: 6/2/2008 Posts: 1,438
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I actually think that some of the future profits are already factored in the price. I certainly expect competition to become even more intense even in the 3G space. Safaricom will however retain its dominant position but growth in profits is unlikely to reach the 40% + that it registered 3-4 years ago. If it manages double digits on a sustainable basis esp beyond the current year,I will be more than happy,but by then it will be more like a utility. Remember being the behemoth it is now it will no longer have the low base effect that it had previously.
True,I will buy into Safcom but certainly not at 5 bob+. In any event over the years,I have learnt not to buy into any share when there is a frenzy for it unless I am looking at selling next week.
Opportunity calls but few respond.
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Rank: Elder Joined: 11/13/2008 Posts: 1,565
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@tycoon - I'm not really convinced about this. If I amy take us back a few steps....SCOM did try something else - content management - by working with DSTV - while that was all very nice. only a few subscribers have 3G Handsets to use the service. I think this was more of an 'ego' product (we're innovative,we're ahead of the game,etc) but I do not think either DSTV or SCOM are making money from this. Mobile TV has a long way to go. Now,I think Cell Broadcast advertising is a good idea and should have been there for a while now but 1) the subscribers need to switch on this feature first 2) currently there are better (and tested) channels to advertise. I cannot see Steers,with 4 outlets in nairobi,signing up to Scom to ping people about wacky wednesday when people come close to a steers outlet - they'd rather do that in the paper or have people walk around with signs/flyers. Then,what about the Zain/Orange/Yu customers?
The other thing,is while this has worked in europe (and perhaps india),consumerism is still in its infance in Kenya...people have to plan stuff and cannot afford to be impulsive....
Having said that,and looking at what has been happening to SCOM share price after the foreign promotion,I suspect somethign else is afoot - something that will be a GAME CHANGER for safaricom (perhaps a major acquisition of a player in the Data market - maybe not AK,maybe not KDN,but something that will make their data services contribute more to their revenue streams).
My two meticals.
The problem with equality is that we desire that it be with those that have more than us rather that those that have less
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Rank: Elder Joined: 11/13/2008 Posts: 1,565
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@tycoon - according to CCK - only abt 1.5 million mobile users access the net through handsets. You give a figure of 14 million subscribers - while that may look impressive - those 14 million do not give SCOM as much revenue as half of Access Kenya's corporate customers (i.e. abt 3000 customers only). Then there is KDN who are 'carriers of carriers' - KDN carries traffic for Zuku (so Zuku is one client). KDN provides connectivity and WAN for a bank - that is two clients - those two clients ALONE may earn KDN more revenue than 100,000 SCOM subscribers....just a thought. I think we should look elsewhere - there might be something afoot...
The problem with equality is that we desire that it be with those that have more than us rather that those that have less
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Rank: Chief Joined: 1/3/2007 Posts: 18,110 Location: Nairobi
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@djinn - AK will have to stay a corporate ISP... the chances of growing its SOHO business are almost dead in the water... Safaricom needs (& can leverage) its dominance in Voice to Data... they have given/sold/subsidised at least 10,000 modems in the past 6 months... These folks will use them... Greedy when others are fearful,Very fearful when others are greedy - to paraphrase WB Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Veteran Joined: 7/24/2008 Posts: 781
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There is a lot of hype about data as the next big thing,seacom have sold less than 60% of its capacity,Teams is nowhere to be seen and we are still waiting for Eassy cable....Mobile phones have taken the juice out of data with opera mini compressing data making it extremely cheap to browse....players will soon beat each other to death while we the consumers rejoice The utimate goal of investing is to buy low sell high;if we re-write this core equation in psychology terms it becomes buy fear sell greed.
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Rank: Member Joined: 9/11/2007 Posts: 62 Location: Nairobi
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Well it maybe true that the future earnings maybe factored into the PE as Mwaahisa says.
Bt Djinn i pointed out and said that not all 14M are users of internet bt they certainly are potential and please note the cost of them using the internet is like buying an internet capable phone (which are now becoming very cheap to all).
Another thing in the 4 areas i have mentioned,Safcom is using the one and only infrastructure. For MPESA,Cell broadcasting,Internet and Calling+SMS.
There only new cost is the labour,software and advertising. This may mean good returns. Just my thoughts spoken aloud...
IF YOU EVER LOSE,MAKE SURE YOU NEVER LOSE THE LESSON!!
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