Category Archives: Safaricom

Huawei in Kenya

Huawei Kenya held a media briefing at their Kenya headquarters near Lavington. This was refreshing as last year when they were to do a demonstration of the Nairobi Smart Cities project; they scaled it down as soon as they heard the Cabinet Secretary was not going to show up for the event.

Huawei has been operating in Kenya for 19 years since 1998. They have done lots of projects mainly in the telecommunications space; they rolled out networks for Safaricom and Telkom Kenya and also launched the Ideos, the $100 smartphone with Google and Safaricom.

The Huawei Kenya representatives spoke about ongoing projects with the government such as cloud services for the entire Kenya government, roll out of government fibre to all 47 counties, and police security & 4G networks. Since 2015 they also provide the software for M-Pesa for Vodafone to roll out across Africa and the world. They also provide about 2/3 of the infrastructure of Safaricom and also power M-Kopa solar payment systems.

Huawei is a $75 billion company with 180,000 employees (80,000 who work in R&D), and operate in 170 countries. It is entirely employee-owned by 81,000 employees in China while the founder/CEO owns  1.4% of the shares. They have 300 staff working in Kenya and provide about 100 scholarships a year for Kenyans to study in China.

In 2016, Huawei sold 139 million smartphones – (number three behind Apple and Samsung). They work hard to combat the reputation that Chinese means ‘low quality’ and Huawei is the world biggest patent filer, and have been granted over 62,000 patents. They spend over $10 billion a year in R&D – and build their own its own chipsets, batteries, and some phones have three antennas etc. to optimize their phones.

Simplifying M-Pesa Payments with 1Tap

As they announced their 2017 financial results today, Safaricom also unveiled 1Tap – the next step of innovation to drive increased financial inclusion in Keyna.

M-Pesa is ten years old and CEO Bob Collymore said that Safaricom was launching “Mpesa 1 tap”  which would reduce the number of steps to complete an M-Pesa transaction, currently about 8 steps on SMS and USSD, to just 1 step.

At the result announcement, the Safaricom CFO Sateesh Kamath said that while 75% of M-Pesa revenue was from traditional person to person transfers, 25% was new from new business like “Lipa na Mpesa” (pay with M-pesa) payments.

Buy Goods is free for customers, except at petrol stations which levy an additional charge, and just over a month ago, Safaricom announced a 50% tariff reduction for all Lipa Na M-PESA Buy Goods merchant fees – to 0.5% of the transaction amount. These were also was capped to Kshs 200 for any payments over Kshs 40,000 (~$400) while payments to merchants below Kshs 200 were made free. Lipa Na M-pesa is used by over 50,000 merchants and Safaricom plans to enable more kiosks, boda-bodas, newspaper vendors and other merchants who are in the informal sector where 80% of Kenyan work to receive such vital business payments at no cost.

Merchants can also get instant payments into their bank accounts at any of 23 partner banks (of the 40 banks in Kenya) from a Lipa Na M-pesa menu in their phones in just a few seconds – and this is useful as many of the merchants don’t have time to go to the bank to deposit cash.

With 1 Tap, all a customer needs to do is tap their cards on the mobile POS machines and then enter their secret M-Pesa PIN to confirm the transaction. Pilot testing for Mpesa 1 Tap has been ongoing in Nakuru where the service now has 13,000 customers and 900 merchants. Kenyans briefly got to see what NFC could work with the Beba Pay service a few years ago, with payments in public service vehicles.

Safaricom Exceeds Earnings Expectations, Powered by M-Pesa and Data

At their Nairobi headquarters today, Kenya communications company, Safaricom announced another record year with the release of the Safaricom 2017 results, which CEO Bob Collymore credited to a focus on customers, innovative products and improving operations.

The company reported revenue of Kshs 204 billion (~$2 billion), an increase of 15% from the year before, and an astounding EBITDA of Kshs 103 billion ($1 billion), up from 83 billion in 2016. M-Pesa growth was 33% to Kshs 55 billion as the number of active M-Pesa customers increased to 19 million – who do an average of 10 transactions a month. The number of customers also went up 12% to 28.1 million.

Later, their CFO said the results came even as customers enjoyed lower costs of voice calls, SMS and money payments. Under “M-Pesa” Kadogo, the company waived M-Pesa tariffs for payments below Kshs 100 ($1) in a push to drive financial inclusion and this led to an 88% growth in transactions in that band.

Chairman Nicholas Nganga said that “Sustaining this growth is key to the Board” as he announced that the contract of Bob Collymore had been extended for an additional two years. Collymore, in turn, said that at a time when several Kenyan companies were announcing job losses, Safaricom had added 500 new jobs during the year and would be adding another 270 mainly in customer care.

Going forward, Safaricom will be changing their earning outlook from projecting EBITDA to projecting EBIT (earnings before interest & taxes) – and for 2018 they project EBIT to be between Kshs 71 to 75 billion after capital expenditure of between Kshs 35 and 38 billion that will be spent in 2017/18.

Following the release of the Safaricom 2017 results, their shareholders will get a dividend of Kshs 0.97 per share, equal to 80% of the profit, is an increase of 27% from 2016 – excluding the one-time bonus dividend paid out last year. The payment will total Kshs 38.8 billion, and 35% of that goes to the Kenya government as the second largest shareholder after Vodafone.

Using the AMIB50 ETF to track Africa Investments

A new fund offers South African investors a chance to invest in 50 large, non-South African companies that are listed on other exchanges and in other countries across Africa. The AMI Big50 ex-SA AMIB50  ETF (exchange traded fund) was launched at the Johannesburg Stock Exchange on April 20.

The ETF is promoted by investment firm – Cloud Atlas Investing and targets institutional and retail investors, offering them a way to invest away from the Rand and South Africa. The current basket of the fund is composed of Itissalat Al Maghrib (Maroc Telecom) (20.6% of the fund), Coml.Intl.Bank (Egypt) (11%), Lafargeholcim Maroc, Guaranty Trust Bank, Safaricom (4.3%), Nigerian Breweries, Tanzania Breweries, Mcb Group Ltd, Attijariwafa Bank and Delta.

In terms of countries, exposure to Morocco 28.4%, Egypt 19.3%, Nigeria 13.7% and Kenya 11%, and for sectors, the spread is banking shares 29.3%, telecom firms 27.8%, food & beverage 17.7%, and industrial ones 14.6%.

Investors need to have a brokerage or custody account in South Africa to buy the AMIB50 and the fund management fee is a total of 1.17% per year.

M-Akiba: Kenya’s new government bonds that are bought by phone

Today saw the launch of M-Akiba, a long awaited product that through which ordinary Kenyans tcan buy government bonds on their phones, using mobile money. The can purchase units as small as Kshs 3,000 (~$30) and earn 10%.

Some tweets about the events today: 

  • The Central Bank of Kenya governor (@njorogep) said  #MAkiba bond is in line with @CBKKenya strategy to increase the level of financial inclusivity in the economy – @NSEKenya   
  • #MAkiba is a collaborative initiative between @NSEKenya @KeTreasury @cdsckenya @SafaricomLtd @AIRTEL_KE @KCBGroup – @NSEKenya
  • Phase One of M-Akiba Runs for 3 weeks targeting Sh150M. Main offer targeting Sh4.85Bn in Q2-Q3 Will run for 3 Months – @kenyanwalstreet
  • M-Akiba bond has so far been Ksh. 535k purchased. I am surprised Kenyans were this interested. So far highest buy is at Ksh. 50k – @MumbiWarui
  • Day One Of M-Akiba; Bonds worth Ksh 1.0 Million Bought Via Mobile Phones In the first 60 Minutes http://kenyanwallstreet.com/m-akiba-retail-bond-goes-live … @kenyanwalstreet
  • To trade #MAkiba bond open a CDS account by dialling *889# either on @SafaricomLtd @AIRTEL_KE .The initial investment per account is 3,000. – @NSEKenya
  • CDSC to manage the register of the bond, offer IPO managements system and the depository and settlement services on behalf of the government – @cdsckenya
  • We have just witnessed the launch of the first M-Akiba bond at the Treasury. It has a coupon rate of 10%p.a.Tradable through the phone.- @JimnahMbaru
  • The #MAkiba bond entry level is kshs 3,000 compared to the current entry point of Ksh 50,000 for any govt securities. @M_AKIBA2017 – @NSEKenya
  • #MAkiba bond is a tax free bond that will attract a 10% interest paid biannually within a period of 3 years @CMAKenya @cdsckenya @CBKKenya – @M_AKIBA2017
  • We are receiving A LOT of transactions per sec. In case of any delays, please just try again. Thank you for the overwhelming response so far – @M_AKIBA2017
  •  UPDATE: Subscription figures- @AIRTEL_KE  Airtel Money -1,300 @SafaricomLtd  MPESA-420 Total collection KES 2.4 million. AS AT 4PM TODAY – @M_AKIBA2017

Some Blogs:  

EDIT

  • M-Akiba is a three year fixed coupon infrastructure “special limited offer” bond
  • Issue number MAB1/2017/3
  • Amount Kshs 150 million (~$1.5 million) issued in March 2017
  • Apply by *889#, and runs from 23 March to 7 April and will be allocated on a first come first served basis
  • Minimum investment is Kshs 3,000, maximum investment is Kshs 140,000 (~$1,400) per day
  • Coupon 10% a year
  • Bond will be listed on the NSE and will be tradable by phone from April 11
  • Trading commission is 0.1% of actual allocations
  • M-akiba interest is tax exempt
  • Pays interest every 6 months: on (2017) 9 Oct, (2018) 9 April, 8 Oct., (2019), 8 April, 7 Oct., (2020) 6 April
  • From a prospectus in a local newspaper.

Notes

‘Akiba’ means  ‘savings’  in Swahili
$1 = Ksh 103