5 Impressive numbers from Safaricom’s earnings report

Safaricom (SCOM) released results for its fiscal 2020 on April 29. Notably, the company continues to grow and its balance sheet strengthening even in the face of intensifying competition from rivals Airtel and Telkom Kenya.

There is a lot investors can learn from Safaricom’s latest report, which reflects how the business performed in the 12 months starting April 2019 through March 2020. We looked into the report and these five numbers stood out for us.

1. Total revenue tops Ksh260 billion as Mpesa and data businesses drive grow 
Safaricom delivered Ksh262.6 billion in revenue in fiscal 2020, rising from $250.3 billion in fiscal 2019 and reflecting a growth of 4.9%. The revenue growth in the latest year was driven by strong performance in Mpesa and mobile data divisions.

Mpesa revenue increased 12.6% to Ksh84.4 billion while Mobile data revenue rose 12.1% to Ksh40.7 billion.

Safaricom’s voice calls business, its main revenue source, has come under increased competition lately as Airtel and Telkom wage price wars to win customers. Consequently, voice revenue declined slightly (1.4%) to Ksh94.5 billion. But the fast-growing Mpesa and data businesses are helping offset weakness in the voice division.

The chart below shows Safaricom’s annual revenue trend for the past five years.

2. Profit hits Ksh74.7 billion
Safaricom made a profit of Ksh74.7 billion in fiscal 2020, rising from Ksh62.5 billion in fiscal 2019 and reflecting a growth of nearly 20%. Revenue growth as well as prudent cost controls helped the company post the impressive profit number.

Safaricom’s annual profit has been rising consistently over at least the past five years as the chart below illustrates.

3. Cash reserve jumps to Ksh18.8 billion
Safaricom exited fiscal 2020 with Ksh18.8 billion of net cash after accounting for Ksh8 billion in outstanding bank loans. The net cash increased from Ksh16 billion in fiscal 2019.

The chart below illustrates how Safaricom’s war chest has been enlarging over the past three years as it prepares for a duel with Airtel and Telkom that seek to join forces in a merger.

4. Dividend payout rises to Ksh56 billion
Safaricom has set aside Ksh56.1 billion for dividends payout, which will come from the Ksh74.7 billion profit the company generated in fiscal 2020. The company will pay out a dividend of Ksh1.40 per share.

The new dividend allocation represents a sharp increase from Ksh50.l billion it paid out last year, where shareholders received Ksh1.25 per share. As a side note, the company paid a special dividend of 60 cents, amounting to Ksh24.8 billion, last year.

Safaricom paid out dividend of Ksh1.10 per share in 2018. It paid out dividends of 97 cents and 76 cents per share in 2017 and 2016, respectively.

For Safaricom shareholders, dividends provide an additional income. The company strives to pay dividends regularly. At the same time, it sets aside some funds to expand its business. This year, for instance, the company will pay out 75% of the profit it made in fiscal 2020 as dividends while keeping 25% of the profit to reinvest in the business.

The chart below illustrates Safaricom’s dividend payouts in the past five years.

5. Customers exceed 35 million or 75% of Kenya’s population
Safaricom finished fiscal 2020 with a total of 35.6 million customers, which is equivalent to 75% of Kenya’s population, according to the latest government census. Of Safaricom’s 35.6 million customers, 28.6 million have been active over the past month.

Safaricom’s Mpesa division finished the fiscal year with 24.9 million monthly active customers, reflecting an increase of 10% from the previous year. Monthly active mobile data customers shot up 14.2% to 22 million while monthly active voice customers rose 6.6% to 25.8 million.

Finally, Safaricom shares gained 7.75% in April to close at Ksh28.50, marking a positive end to the first month under new CEO Peter Ndegwa.