What Should You Expect As Safaricom Reports Half-Year Results?

Safaricom (SCOM) is set to release its fiscal 2017 half-year (or FY1H17) results on November 4. But what should you expect as the country’s largest company by market cap reports half-year earnings? Will the results move the earth, sorry, the stock market?

Here’s a flashback of Safaricom’s half-year results for a year-ago period and highlights of metrics investors would want to track closely in the latest half-year results.

Revenue up 22.5%
For FY1H16 covering the six months to September 2015, Safaricom reported total revenue of Ks97.22 billion, up 22.5% over the same period a year earlier. Service revenue rose 12.5% year-over-year (or YoY) to Ks84.9 billion. The revenue in the last half-year period was helped by more than Ks8.4 billion that came from what the company reported as construction revenue.
 

There was no construction revenue in the FY1H15. As Safaricom tries to diversify its revenue streams, it will be interesting to see if it continues to book construction revenue and if the metric is increasing. Management comment on the sustainability of new revenue sources such as construction would also been important for shareholders and prospective investors to keep a close eye on.

For the bottom-line, Safaricom reported FY1H16 EPS (earnings per share) of Ks0.45, up from Ks0.37 in a year-ago period.

What’s the health of Service business?
The bulk of Safaricom’s Service revenue comes from voice, but the contribution of voice revenue has been declining as a percentage of the total. In FY1H16, voice sales accounting for 53.2% of total service revenue, down from 57.8% in the prior year. However, Mpesa contributed 22.8% of Service revenue in FY1H16, up from 20.6% in the prior year. Internet revenue was 13% of Service revenue in FY1H16, up from 10.6% in the comparable period a year earlier. Mpesa and Internet are two of Safaricom’s fastest growing businesses and it will be interesting to see if their growth is improving or cooling.

 

An eye on subscriber growth
Because voice remains the major contributor to Safaricom’s topline, not only should investors keep an eye on voice sales in FY1H17, but also subscriber acquisition in the period. Safaricom added about 2 million subscribers in FY16, lifting its customer base to more than 25.16 million subscribers. The company said its customer base expanded 15% YoY in FY1H16.