Kutwa Tuesday: July 8 Briefs

away from the Grand Regency

Banking
– CFC/Stanbic merger/takeover formalized: As at June 1, the combined banking groups had assets of 78.3 billion shillings [$1.26 billion], deposits of 55 billion [$888 m] and loans of 38.9 billion [$627m]
– EABS Bank is now Ecobank Kenya
– Business Cubs: Bank of Africa will launch a small business Club for clients.
– Going international: building on the success of Safaricom’s M-Pesa, Vodafone will do money transfer between UK and Kenya challenging western union on phone transfers to India, Turkey, Egypt and South Africa (from Balancing Act Africa)

Investments
– Everyone lovers Safaricom; with 90% of the shares volumes since listing, the company has been added to the AIG index, NSE 20 and NASI indexes from July 1
– One month after Safaricom allocations, and despite paying an extra fee (30/= for a CDS statement) and making several trades, no new CDS statement has come in the mail

Media
– KTN joins the morning show club with Sunrise Live – coming a few months after Citizen TV and Nation (NTV) with their ‘breakfast shows’
– There’s a new relaunched Standard newspaper out today with new layout – but their byline For Fairness, Justice, and Prosperity is straight out of Superman

Energy
– Sweden/China joint oil search: Lundin Kenya has bought a share of the field assigned to China [Block 9, Kenya].

Travel
– Having moved to cut out travel agents, Kenya Airways will next offer hotel and car booking online at their website
– Rift Valley Railways (RVR) will raise freight charges up 14.5% and will charge a fuel surcharge based on average diesel cost and US$ exchange rate from 1st august

Other
– Kenya has no summer or winter, but the high court has a summer vacation from 1st to 8th August

Questions from the blogs
– A recap of the Kenya Re AGM
– Has tourism in the Mara recovered in 2008?
– Does EDGE or 3G after all?

Opportunities

Digital: KDN and the ICT Kenya Digital Village are offering free connectivity for digital villages and schools: the program targets rural cyber cafes and schools – who are willing to pay a set- up fee, and share some revenue earned with KDN

Investments
– The Barclays Bond closes tomorrow (9/7)
– KCB rights close on 18/7 – so far only NBK has offered loans for KCB rights (up to 90% finance)

Jobs
– EABL: logistics manager, governance improvement manager, group audit & risk manager, application support analyst, procurement managers (2). Apply to hr.recruitment@eabl.com
– The electoral commission of Kenya: registrar of political parties, internal audit manager, finance officer. D/L is 23/7 by snail mail
– Captains of B1900 C and D at executive turbine. Apply through info@xturbine.co.ke
– Film commission of Kenya: head of programmes, hear of HR & administration, head of finance, Programmes manager, marketing assistant, legal assistant, ICT assistant, executive secretary. Apply to ceo@filmingkenya.com by 18/7
– Keroche: distributors, area sales representatives. Apply to director.marketing@keroche.com by 11/7
– National Oil Corp of Kenya: risk analysts, internal audit assistant, procurement analysts, supply analyst
– Executive director of the privatization commission which became operational in January 2008. Apply (through deloitte) to esd@deloitte.co.ke (22/7)
– Resources manager at the Rockefeller foundation. Apply (though KPMG) to esd@kpmg.co.ke by 11/7

and
Marie Stopes: deputy director of male circumcision project (africa) [location: zambia} and male circumcision partnership deputy project manager [location: zimbabwe] d/l is 19/7

Scholar/internships
– Rhodes Scholarships (2) for Kenyans. D/L is 31/8
– World Bank young professionals program. D/L is 15/7

The Trouble with Celtel

Are free calls enough?

[I am not a customer, but I have probably bought and discarded three of their SIM cards to coincide with some ongoing promotions. Too many people I call are on Safaricom, and until number portability comes along, (carrying my number to another network) I am stuck with Safaricom.]

Beside number portability, there are other things they need to sort out; Celtel has been losing customers (23% down from a year ago), executive staff (compared to the ‘stable’ team at Safaricom and direction. The change of brand from Kencel to celtel to Zain only benefits paint and marketing companies (but there’s already a ‘Z’ brand in Tanzania and a couple of other African countries)

My biggest peeve with them is there are too many products; these are never promoted long enough to mature or register with subscribers and potential customers.

This week
– For internet/data users – they have Uhurunet – unlimited internet service, whose equipment is a USB modem costing 6,000 shillings [$95] and 3,000 [$48] per month for unlimited internet which is not bad [and this compares well against Safaricom]

– For callers: Earlier this week they launched a six-month tariff with free airtime for people who purchase cheap phones (targeted at rural subscribers). And now from the skunkworks group we learn that they have another new tariff with Free calls from 6 a.m. to 6 p.m. every day (top up with 100 shillings to take advantage) – will this be the one that gives them an edge over Safaricom? That’s the problem with Celtel – great products, big marketing budget, but jumbled messages that confuse subscribers. In the last year they have advertised their lowest rate at 6 shillings (Mambo 6), 4 shillings (to 3 preferred numbers) and now 3/= ($0.05)per minute. That is three times cheaper than Safaricom, but who has the masses and who has the right message?

Other tales

– Opportunity: Nominate a worthy Kenyan to the Generation Kenya program

– From Uganda and GTV comes pre-paid premium TV – subscribers can pay for their GTV pay TV packages using scratch cards

Experian Kenya: joining the Kenyan credit reference pool is Experian in partnership with Quest Holdings.

– Day 19 of the Safaricom IPO has 4,121 deals, worth 342 million ($5.42 million) Closing 7.20 High 7.40 Low 7.00 Last 7.20 and volume of 47.5 million shares. It’s well supported and Buyers must be sniffing out a conclusion to the de-leveraging process. Commentary and data from Rich.co.ke – NSE data vendor [with Free real time prices between 0930 -1500]

Grand Debate

[EDIT – at the end of the session, members of parliament passed a motion of censure against the Minister for Finance – Amos Kimunya, MP for Kipipiri]

Live on TV – all stations is the debate to censure Finance Minister Amos Kimunya for his role in the controversial sale of the Grand Regency Hotel.

Before a rather hostile opposition side, He’s just given a statement where he:

– Outlined his long history as an accountant and a crusader for reforms, revenue gains and tax savings for the Kenyan people numerous times such as with De La Rue, pending contractor bills, Safaricom, Telkom Kenya
– On Safaricom – Mobietelea was there long before he was in government or parliament
– On Alcazar – the reputed owner of 11% in Safaricom – he says after Vodafone (K) and the Kenya government, no one else owns more than 1% of the company (after the IPO)
– On the Grand Regency Hotel: it was sold for $45 million {~ billion shillings} in May 2008
– The Central Bank made the sale and was not under duress.
– The ministry of lands, attorney generals office, prime ministers’ office have all received various reports
– More info forthcoming tomorrow

Safaricom IPO: 
Day 18 – Deals 5,266 Turnover 439, million ($6.86) million Ave 7.29 Closing 7.25 High 7.50 Low 7.20 Last 7.30 Volume 60.3 million shares – Market still absorbing supply but its very well supported at these levels. The move higher depends on how much more de-leveraging has to be done.

Day 17 – Deals 4,671 Turnover 302 million ($4.7 million) 7.35 High 7.50 Low 7.25 Last volume of 41 million shares – orderly and some sellers came off 7.50 to sell lower. Strong demand at 7.25. Remains constructive. 6.65-8.15 range.
commentary and data courtesy of Rich.co.ke – N.S.E Data Vendor

Uh Oh

Here we go again The Indian Ocean Newsletter reports

Just a few months after the collapse of the Nyaga Stock Broker , a large company heavily indebted to its clients, another stockbroker on the Nairobi Stock Exchange (NSE) is in turn facing financial problems

Did the unintended collaboration of Coldtusker / Business Daily unearth the firm? This comes after several recent articles in the Business Daily on the renewal of broker licenses by the Capital Markets Authority.

Plastic cheaper: KCB lowering their credit cards fees. Annual fees for the KCB card will now be was 3,000 (~$47) from 4,000, while their Visa Gold will now be 4,000 (~63) from 6,000. Card penetration remain lows, I believe Barclays are the biggest company with 81,024 cards in 2007 (double 41,019 in 2006)

Entry-level opportunities (and expiry dates)
most from the daily papers last week
– Graduate trainees at the East African Portland Cement company (15/7)
– Management trainees at Unilever Kenya (7/7)
– Management trainees at Telkom Kenya (7/7)
– Young processionals program at the World Bank (15/7)

Safariom Day 16: Deals 3,939 Turnover 270.8 million shillings [$4.23 million] Avgerage 7.44 Closing 7.40 [+ 2.07%] High 7.55 Low 7.30 Last 7.45 Volume 36.4 million shares. Commentary: A constructive session. Bouts of indigestion are to be expected but those who had to flip [over leverage] have done so by now, given the volumes we have witnessed since the IPO. [Commentary and data provided by Rich.co.ke – Nairobi Stock Exchange Authorized Data Vendor]

KCB Rights reloaded

A half year after Diamond Trust , it’s now KCB conducting a second rights issue in the span of a few years. This comes at a time when international banks raising capital are facing more scrutiny than before.

KCB are back to ask their shareholders to chip in. In June 2004 they exceeded the 2.45 billion target and this time they are set to raise 5.54 billion ($86.6 million). How else is this issue different?

What has changed?
Then ; Now
June 04 : June 08
Focus – then Kenyan expansion & rebranding ; now East African expansion, Bank ESOP
New shares 50 million ; 222.1 million [but just 22.1 million in pre-split [PS] 2007 terms]
Price 50/= ; 25/= (actually 250 PS – pre-split 25% discount each time)
Market cap 8.7 billion ; 66.4 billion
2003 PAT 486 m ; 2007 2,974 million
Ratio 1:3 ; 1:9 (1 new share for 9 owned)
Result: oversubscribed; ? (Likely to be the same)

Cost of the offer
Budget:2004 offer – 104 million ; 2008 offer – 220 million
What costs more? : CMA approval fees – up 125% (13.75m), Transaction advisor – up 103% (8.1 million), PR/advertising – up 34% (17.4 m), Printing – up 30% (15 million), Reporting accountant up 26% (3.7m)
What costs less? Legal advisor down 58% (756,000), NSE fees down 50% (250,000)

Market players changed
NSE members 17:19
In Genghis Capital (new stockbroker?), Renaissance Capital, Bob Matthews, NIC (was solid) Afrika Investment (was Ashbhu)
Out: Francis Thuo, Nyagah, Solid, Ashbhu – stockbrokers
Morphed: Faida, Kestrel Standard Suntra (from brokers to investment banks)
IPO financiers: 2004 memorandum mentioned 10 banks and two building societies offering Rights Loans ; this time no mention as share loans are a touchy subject in 2008

Shareholders: Anchor shareholders – then and now : Government of Kenya (35%:26%), NSSF (1%, 7.8%), ICDCI (4.3%, 3.5%), Sunil shah, (2.06%, 2.33%) staff pension fund (4.12%, 2.32%)

Calendar: Record date 4/6, rights start trading 23/6, last day trade rights 11/7, last date to pay for rights 18/7, new share trade 15/8, [to stave dilution, investor accounts will be credited 10 days before new shares are listed]

Investment Decision: Advice on investing in KCB rights comes from the Nairobist newsletter.