This archive report was first published on 2 October 2019.
Safaricom is set to release its first half 2020 results in October, with analysts projecting a 10.5% year-on-year growth in the telco's net profit, according to a pre-earning and valuation update report by Genghis Capital published on October 2, 2019.
The broker estimates Safaricom's fair value at KSh 29.35, a 6.6% increase from the current market price of KSh 27.55.
However, the projections and recommendations have been attributed to various factors, including a decline in M-Pesa revenues growth to 13.3% year-on-year from 18.2% in the first half of 2019, due to the decline in the performance of the betting industry, which accounts for about 7% of M-Pesa revenues.
On the other hand, Fuliza is expected to cushion M-Pesa growth, with the report predicting a KSh 108 billion overdraft disbursements as of September 2019, contributing 3% of M-Pesa revenue in the first half of 2020.
Additionally, voice, SMS, and mobile data revenue are expected to grow by 0.8%, 4.0%, and 5% respectively, due to the high competition in the market and the move by management to onboard more customers under the bundle revenue structure.
Fixed service revenue is also expected to grow by 20% year-on-year, attributed to the accelerated roll-out of the fibre network, targeting to connect over 200,000 homes by the full year of 2021.
Lastly, Safaricom has plans to venture into Ethiopia, with discussions with the government still ongoing, and the analysts' report stating that there is a huge potential for growth in the Ethiopian mobile money market.
