May 23, 2011 - not negotiated tariffs with the company ... âbusinessUP TO DATE, ACCURATE BUSINESS INFORMATION ... mobi
THE STAR
LOCAL 11
Monday, May 23, 2011
★business
Youth benefit from World Bank project
Can YOU outsmart the expert?
BY STAR REPORTER AN estimated 200,000 youths have over the last five years been integrated in various development programs around the country through promotion of leadership skills. The initiative sponsored by the World Bank and Japanse Social
ALY KHAN’S STAR PORTFOLIO SAFARICOM RESULTS PROVE AIRTEL STRATEGY IS NOT A THREAT SAFARICOM reported FY Results last week. The Key Data was as follows; Turnover grew 12.9% to Sh94.83b, voice revenue eased -1.7% to Sh63.5b which is 66.9% of total revenue, SMS revenues expanded +45.3% to Sh7.54b. M-Pesa revenues expanded +56% to Sh11.78b. Mobile and fixed data revenue expanded +80.3% to Sh5.37b. Minutes of use per subscriber increased from 60.6 to 96.0 minutes. M-Pesa now has 13.8m users +45.5% Data subscribers 4.9m +85.6%, mobile data SMS and MPesa revenue 26% of total revenue. PBT declined 12.4% to Sh18.36b versus Sh20.97b. Blended ARPU 439 versus 457 Marketing Costs +37% Gearing 19% Dividend Held at 20c a share Pay Out Ratio of 61% EPS 0.333 a share It was Edwin Lefevre in his totemic Novel Reminiscences of a Stock Market Operator who said The Tape is Your Telescope and therefore, what is the Telescope telling us? Firstly, we need to place these results in their context. These results reflect the arrival of Shree Sunil Mittal’s Bharti Airtel. And right here on the frontier, Mittal’s Airtel elected to fight a proxy war and instead of tanks and bullets, Airtel elected to use voice as their weapon of choice. Therefore, when I saw that voice revenue had declined only 1.7%, I was in fact quite astonished. Minutes of use have increased to 96 minutes and apparently the correlation between lower prices and increased usage was running at 75%. Safaricom have played some very solid defense and held their voice revenue at Sh63.5b shillings.
UP TO DATE, ACCURATE BUSINESS INFORMATION NEWS YOU CAN USE, EVERY DAY
That is not pocket change. And I note that Safaricom turned their defensive play into offence with a 1 shilling offer from 1000pm to 1000am as of Friday. If I were Mr. Mittal, I would be now asking myself whether, spraying money around as if it were Confetti was a strategy worth the candle and essentially this 1 shilling Safaricom offer is a cute way of putting that question. Voice is the defensive play. What has happened on the offensive play? The offensive play takes in M-Pesa, data and SMS. Look above and you will note really muscular absolute growth. The future of the mobile phone will not be about voice. It is about the mobile wallet, the bank account in your phone. It is about the PC in your pocket [Data]. And when I look at the Tape for Evidence of the future revenue, I see some sexy growth. Safaricom held their dividend at 20 cents a share which is a 61% pay out ratio. I wish other companies at the Nairobi Stock Exchange would follow Bob Collymore’s progressive dividend pay out policy. As an investor, you are paying about 11.3 x annual earnings for Safaricom. As a contrast, you are paying 22 x annual earnings for EABL. Safaricom now represents outstanding value at Friday’s closing price of 3.85. This century will be characterised as an information century as a century when mobile phones toppled dictators. The future is not seen in the rear view mirror. Voice is not dead and Safaricom are sitting on Sh63.5b worth of revenue to prove that but it is not the future and when I look forward, I like what I see in the tape.
Shares go up and down and readers are advised that this column represents Mr Satchu’s personal opinions.
Development Fund has been implemented by Kenya Community Development Foundation and has spurred youths to closely monitor development projects in their communities. “The youth have demonstrated a lot of potential that can be harnessed to move this country forward and drive the country
to realise Vision 2030,” said Japanese Ambassador to Kenya Toshihisa Takata. KCDF also provided grants to promote peace building efforts targeting youth from areas hit by the 2008 post poll violence clashes. Other areas supported included HIV/Aids, recreation and income generating projects.
Cooking gas prices to drop next year
OUT OF REACH: The price of 13 kilogramme cooking gas has increased to between Sh2500 and Sh2700. BY LOLA OKULO THE price of cooking gas is expected to drop significantly from early next year with unveiling of new distribution and storage LPG facilities by Kenyan firm African Gas and Oil Limited. AGOL which is currently undertaking a Sh10.6 billion ($125 million) project of building an import and export terminal adjacent to the port of Mombasa for Liquid Petroleum Gas said the product has been expensive because of logistics. A distribution terminal being constructed as part of the project is expected to be complete by quarter four 2011 and will ease supply constraints locally thereby reducing overall cost of cooking gas. Currently the price of a 13kg
cooking gas has increased to between Sh2500 and Sh2700 from slightly over Sh2000 in December 2010. “LPG is not expensive in the bigger world, there it is even cheaper than kerosene,” commented said AGOL Managing Director Ezra Pakter. Pakter said that without such a terminal small tankers are used for importing LPG forcing importers to do several round trips to get desired quantity thus making it expensive and the cost is passed on to consumer. “The storage facility that we are building will have a capacity of 28,000 metric tonnes of LPG which is about 20 times more than the current cargo size in Mombasa,” revealed Pakter The infrastructure project by AGOL has been divided into three; construction of marine ter-
minal and transfer pipeline, a storage terminal, and a distribution terminal and cylinder filling plant. With the completion of a bigger terminal at the port, big tankers will now be able to dock there eliminating the need of doing several trips to bring in the needed quantity of gas. OiLibya one of the local oil marketing firms which also sells cooking gas acknowledged that indeed completion of the project will signal lower gas prices in the country. “It is difficult to predict by how much the price of cooking gas will come down because we have not negotiated tariffs with the company (AGOL) yet but I am a 100 per cent sure that the new infrastructure will bring down the price,” said Managing Director Rida Elamir.
