The ICT industry in Kenya is rapidly growing. It realized a growth of 13.4% in 2014 and now contributes an estimated 8.4% to GDP and with well-guided policies, the sector is forecast to attain the Vision 2030 target of contributing 10% to the country’s GDP by 2017.
Safaricom Ltd is the largest mobile operator in the Kenyan market. According to the Communications Authority, it serves over 23 million customers: more than two thirds of the Kenyan market, followed by Airtel, Orange and lastly FinServe (a subsidiary or Equity Group Holdings Ltd ). Its services include mobile and fixed voice, SMS, data, internet and M-PESA, a mobile phone-based money transfer service.
Recently, KPMG released a true value report on Safaricom showing how successful it has been in achieving the goal of improving quality of life and contribute to sustainable livelihoods for people throughout Kenya. Safaricom’s operations generated KES 144 billion in additional direct and indirect economic activity in Kenya in FY15. If the wider effects on the economy are included this number increases to KES 315 billion, 6 percent of Kenya’s GDP. It also sustained over 112,000 direct and indirect jobs. If the wider effects on the economy are included this number increases to over 682,000 jobs over FY15.
The report also estimates that M-PESA created total societal value of KES 133.8Billion during FY15. This is 4 times the M-PESA transaction fees earned by Safaricom in the same period, and means that M-PESA creates Ksh.79 of value for Kenyan society with every transaction. Most (86 percent) of the positive social impact created by M-PESA was in the form of increased personal savings for customers.
Some of the achievements are its continued rollout of 2G, 3G & 4G sites, the launch of a new M-PESA platform in Kenya, growth of Lipa na MPESA and regional cross border M-PESA transfers, rolled out an additional 620 km of fibre and connected an additional 300 buildings and finally fibre connectivity to Ethiopia
HF YEAR 2015-2016
HF YEAR 2014-2015
Free Cash Flow
EPS (Earnings per share) increased to 0.80 (FY 2014-2015) from 0.57 (FY 2013-2014) indicating increased profitability of the company. The P/E ratio for the annual year 2014/2015 is 21.31, which indicated that investors were willing to pay Ksh 21.31 for every Ksh 1 of earnings that the company generates. Investors usually are willing to pay a higher P/E for companies they judge will be growing faster than the norm.
The amount paid out as dividends has also increased over the years. The dividend yield according to FY 2014-2015 duration was 3.75 while the industry average is 1.17 according to Reuters. The yield’s 5-year growth rate was 26.19 while the industry average is 7.63. A high dividend yield can be considered evidence that a stock is underpriced.
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