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Safaricom 2019/2020
Mike Ock
#341 Posted : Friday, June 05, 2020 8:13:51 AM
Rank: Member


Joined: 1/22/2015
Posts: 665
Monk wrote:
Mike Ock wrote:
What's with trying to reinvent the wheel? The market has already taken to the till number system, just give all matatus a till number. Then advertise the fact that with cashless payments, you won't have to hold your breath for change from crafty makangas


Safaricom guys would love this...getting handed a whole industry, with no competitor to keep them from getting greedy.


Of course Airtel and Equitel would be welcome to include their own till number type of system in matatus
sparkly
#342 Posted : Friday, June 05, 2020 8:17:40 AM
Rank: Elder


Joined: 9/23/2009
Posts: 7,801
Location: Enk are Nyirobi
VituVingiSana wrote:
sparkly wrote:
VituVingiSana wrote:
sparkly wrote:
aemathenge wrote:
NTSA Seeks Ban On Use Of Cash For Matatu Fares

WEDNESDAY, JUNE 3, 2020 9:00

Use of cash in public transport services is likely to be banned once the government approves a digital fare collection system that will also have the technical capability to contact trace passengers in the fight against the novel coronavirus disease.

The National Transport and Safety Authority (NTSA) has advertised for bids inviting tech companies to install mobile software and web applications for the nearly 2 00,000 matatus in the country.

Once the system is in place, all passengers could be required to pay their fares via mobile money platforms, giving the government access to their identities and personal contact information that is needed to combat the Covid-19 pandemic, which has disrupted lives worldwide.

NTSA Director-General George Njao said through a tender notice the authority plans to introduce the mandatory use of cashless payments for all Public Service Vehicles (PSVs)”.

“The cashless system will also provide a platform for development of an effective contact tracing application to support the government effort in addressing the coronavirus pandemic.”

Contact tracing, a disease control method that traditionally relies on patients’ memories of their movements, identifies people they might have infected so they too can be isolated either for monitoring or treatment.

Firms are expected to submit their bids before June 16, an indication of the State agency’s plan to roll out the cashless payment platform.

That means companies have two weeks to submit their bids.

Source: The Business Daily Newspaper: https://www.businessdail...9816-ftl5d0z/index.html


NTSA shouldn't invest in a cashless system. They should simply pass a law banning cash fares and require matatu saccos to procure and install cashless fare systems. Impose fines for operators and passengers found flouting.
What if there are 10 different systems that don't talk to each other?
Would I need EquiCard on some routes and SafCard on others?


One provider for all matatus is monopolistic and anti-competitive. Payment should be left to market forces.
I like competition too. What I am asking is will one need EquiCard for some routes, SafCard for others, etc?


Providers should roll out their systems, the users will decide which system is best.
Life is short. Live passionately.
sparkly
#343 Posted : Friday, June 05, 2020 8:22:59 AM
Rank: Elder


Joined: 9/23/2009
Posts: 7,801
Location: Enk are Nyirobi
Mike Ock wrote:
What's with trying to reinvent the wheel? The market has already taken to the till number system, just give all matatus a till number. Then advertise the fact that with cashless payments, you won't have to hold your breath for change from crafty makangas


GOK registered people for Huduma Cards which are supposed to double up as payment cards. Now is a good time to give people their cards.
Life is short. Live passionately.
murchr
#344 Posted : Friday, June 05, 2020 3:49:52 PM
Rank: Elder


Joined: 2/26/2012
Posts: 15,603
sparkly wrote:
Mike Ock wrote:
What's with trying to reinvent the wheel? The market has already taken to the till number system, just give all matatus a till number. Then advertise the fact that with cashless payments, you won't have to hold your breath for change from crafty makangas


GOK registered people for Huduma Cards which are supposed to double up as payment cards. Now is a good time to give people their cards.



Huduma cards SHOULD NOT BE payment cards.
"There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
.
sparkly
#345 Posted : Friday, June 05, 2020 4:02:56 PM
Rank: Elder


Joined: 9/23/2009
Posts: 7,801
Location: Enk are Nyirobi
murchr wrote:
sparkly wrote:
Mike Ock wrote:
What's with trying to reinvent the wheel? The market has already taken to the till number system, just give all matatus a till number. Then advertise the fact that with cashless payments, you won't have to hold your breath for change from crafty makangas


GOK registered people for Huduma Cards which are supposed to double up as payment cards. Now is a good time to give people their cards.



Huduma cards SHOULD NOT BE payment cards.



You missed the memo

http://www.industrializa...o-pay-for-state-services
Life is short. Live passionately.
murchr
#346 Posted : Friday, June 05, 2020 5:15:27 PM
Rank: Elder


Joined: 2/26/2012
Posts: 15,603
sparkly wrote:
murchr wrote:
sparkly wrote:
Mike Ock wrote:
What's with trying to reinvent the wheel? The market has already taken to the till number system, just give all matatus a till number. Then advertise the fact that with cashless payments, you won't have to hold your breath for change from crafty makangas


GOK registered people for Huduma Cards which are supposed to double up as payment cards. Now is a good time to give people their cards.



Huduma cards SHOULD NOT BE payment cards.



You missed the memo

http://www.industrializa...-pay-for-state-services



Hapa mta pepetwa mshangae. Dead on arrival.

"There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
.
Ericsson
#347 Posted : Sunday, June 07, 2020 11:35:48 AM
Rank: Elder


Joined: 12/4/2009
Posts: 8,557
Location: NAIROBI
murchr wrote:
sparkly wrote:
murchr wrote:
sparkly wrote:
Mike Ock wrote:
What's with trying to reinvent the wheel? The market has already taken to the till number system, just give all matatus a till number. Then advertise the fact that with cashless payments, you won't have to hold your breath for change from crafty makangas


GOK registered people for Huduma Cards which are supposed to double up as payment cards. Now is a good time to give people their cards.



Huduma cards SHOULD NOT BE payment cards.



You missed the memo

http://www.industrializa...-pay-for-state-services



Hapa mta pepetwa mshangae. Dead on arrival.


old news
babashuge
#348 Posted : Monday, June 08, 2020 12:46:01 PM
Rank: New-farer


Joined: 1/4/2019
Posts: 38
Location: Nairobi
This bull is refusing to be held down by the crises ongoing
Ericsson
#349 Posted : Wednesday, June 10, 2020 7:42:17 AM
Rank: Elder


Joined: 12/4/2009
Posts: 8,557
Location: NAIROBI
babashuge wrote:
This bull is refusing to be held down by the crises ongoing


True picture will be known when it goes ex dividend end of next month.
And when half year results will be released in November
Angelica _ann
#350 Posted : Wednesday, June 10, 2020 8:04:39 AM
Rank: Elder


Joined: 12/7/2012
Posts: 11,596
Ericsson wrote:
babashuge wrote:
This bull is refusing to be held down by the crises ongoing


True picture will be known when it goes ex dividend end of next month.
And when half year results will be released in November


Your average Wanjiku was crowded out in Safaricom just like in Bilie Akota Tinende!!!

Though still waiting for the fall Drool
In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
Ericsson
#351 Posted : Wednesday, June 10, 2020 1:09:06 PM
Rank: Elder


Joined: 12/4/2009
Posts: 8,557
Location: NAIROBI
Ericsson
#352 Posted : Wednesday, June 10, 2020 1:44:52 PM
Rank: Elder


Joined: 12/4/2009
Posts: 8,557
Location: NAIROBI
aemathenge
#353 Posted : Saturday, June 13, 2020 11:32:44 AM
Rank: Elder


Joined: 10/18/2008
Posts: 3,297
Location: Kerugoya
Safaricom PLC has grown its free cash flows at an average rate of 29.19% in the last decade.

Assuming Safaricom grows its free cash flows at a conservative rate of 13% for the next ten years, Safaricom free cash flow per share will amount to Kshs. 5.94 in 2030.

The current Safaricom free cash flow per share is Kshs 1.75.

Assuming Safaricom does trade at the usual multiple of 20 times free cash flows in 2030, then expected Safaricom price in 2030 will be Kshs 118.80.

This narrows down to an annual return of 14.58%.

The implication is Kshs 10,000.00 invested in Safaricom should grow to Kshs 39,002.00 in 2030.

And assuming your minimum required rate of return is 15%, then the maximum you should pay per share of Safaricom PLC is Kshs. 29.70.

And one may ask, what gives you the confidence that this projection may hold?

My answer is this:

(A) Safaricom PLC has reached a stage in this life that moving forward we are most likely to see a gradual decline in capital expenditure that will give a huge boost to its free cash flows moving forward.

(B) Anchor shareholder Vodacom and Vodafone PLC will be there to ensure good corporate governance is still adhered to in Safaricom PLC

(C) We are gradually moving to a cashless society and Safaricom Mpesa will take advantage of that. COVID 19 is just a catalyst to the inevitable cashless society in the future.

(D) Safaricom is yet to monetize the huge data at its disposal.

Comments and Responses:

(E) If Ethiopia opens its borders to new entrants in telecoms like it's working on, Safaricom will use that as a new market, new opportunities, on a populace almost double Kenya's size.

There could be some good cheese there.

(F) Safaricom is always innovating, now working on some other financial products with new players. Think newspapers, and the metering solution with water companies.

Comments and Responses:

Lots of assumptions and predictions about its future growth and earnings.

Its current value is far above its real value though.

It's P/E at Kshs 29.70 is 24.9 (using EPS average of 1.19 for the last 3 years).

P/B at the same is 8.3, using the latest book value/share of 3.57.

While it may yet realize your projections or even surpass them, it is already being traded at a price that would need it to grow its book value/share by 554% ( to attain book value/share of 19.8), in order to be reasonably priced (that is a P/B of 1.5 at most) and at the same time grow it's EPS to 1.98 in order for its P/E to be 15 at most at the price of 29.70.

That's a 66.3% increase. Again, maybe it will do that.

But anyone buying it at 29.70 would need to realize that they are speculating on its future, not buying it's present.

The current prices reflect optimism about the company/stock that most investors share.

In the end, the market will likely correct itself.

This is usually true particularly concerning stocks that have shown very great growth.

Comments and Responses:

Only two assumptions made here:

1.Safaricom future growth in free cash flows

2. Safaricom future multiple of free cash flows.

Is that what you call too many assumptions?

Discount rate of 15% is absolutely your business, whether you use 15% or 20% or 50% it's up to you.

2. Safaricom average PE ratio for last three years is 1.59.

Safaricom current earnings per share is 1.84. So you may need to revise those projections on 66% growth in earnings per share to Kshs 1.98

3. Price to book value ratio is of little relevance to Safaricom given we have a lot of intangible assets in Safaricom like Mpesa, which is not found in Safaricom books plus Safaricom massive data on Kenyans etc.

Additionally, price to book value ratios should take into account the return on equity and return on invested capital and really a price to book value ratio of 1.5 assumes Safaricom return on equity and return on invested capital is around 13%, which is really unrealistic since both are over 45%.

Comments and Responses:

How much return one wants from the share is their own business.

You actually made only 2 assumptions. So, a more correct term would be that the assumptions are big, not many.

The biggest of the two being a prediction on its price in 10 years’ time. The further into the future one predicts, the more unreliable the prediction.

To put this into perspective, from the time of its IPO to now, the price has increased by 509%, a phenomenal increase that has now outpaced earnings by 16.5x (using a price of 30.45, EPS of 1.84).

For it to reach 118.80 from a buy price of 29.70, it would need to grow by 300%, another phenomenal increase.

I think any prediction on the market's behavior at any time is extremely hard to realize.

On the free cash flows, it's a prediction based on the decisions of management that is sure to change significantly over a decade, as well as on the decisions that management makes in a very fast-changing business environment.

On the EPS, I used the average from 2017-2019. Not 2018-2020 because I'm more conservative about performances.

Source: Facebook.
Ericsson
#354 Posted : Saturday, June 13, 2020 6:46:00 PM
Rank: Elder


Joined: 12/4/2009
Posts: 8,557
Location: NAIROBI
Safaricom submits bid to enter Ethiopia
Ericsson
#355 Posted : Monday, June 15, 2020 6:31:04 PM
Rank: Elder


Joined: 12/4/2009
Posts: 8,557
Location: NAIROBI
Ericsson wrote:
Safaricom submits bid to enter Ethiopia and will partner with Vodacom

Ericsson
#356 Posted : Wednesday, June 17, 2020 9:00:14 AM
Rank: Elder


Joined: 12/4/2009
Posts: 8,557
Location: NAIROBI
Safaricom customers redeemed 1 billion Bonga points worth ksh.330 million in two months through the Bonga for Good initiative which came to an end on 4th June 2020.
Ericsson
#357 Posted : Friday, June 19, 2020 5:25:03 PM
Rank: Elder


Joined: 12/4/2009
Posts: 8,557
Location: NAIROBI
Safaricom to team up with Vodafone and Vodacom for the Ethiopia bid.
Other bidders for second license are Orange and MTN Group.

https://www.bloomberg.co...ethiopia-license-auction
Ericsson
#358 Posted : Saturday, June 20, 2020 12:44:59 AM
Rank: Elder


Joined: 12/4/2009
Posts: 8,557
Location: NAIROBI
aemathenge wrote:
Safaricom PLC has grown its free cash flows at an average rate of 29.19% in the last decade.

Assuming Safaricom grows its free cash flows at a conservative rate of 13% for the next ten years, Safaricom free cash flow per share will amount to Kshs. 5.94 in 2030.

The current Safaricom free cash flow per share is Kshs 1.75.
Free cashflow may be impacted by capital expenditure in Ethiopia if entry bid is succesful.

Assuming Safaricom does trade at the usual multiple of 20 times free cash flows in 2030, then expected Safaricom price in 2030 will be Kshs 118.80.

This narrows down to an annual return of 14.58%.

The implication is Kshs 10,000.00 invested in Safaricom should grow to Kshs 39,002.00 in 2030.

And assuming your minimum required rate of return is 15%, then the maximum you should pay per share of Safaricom PLC is Kshs. 29.70.

And one may ask, what gives you the confidence that this projection may hold?

My answer is this:

(A) Safaricom PLC has reached a stage in this life that moving forward we are most likely to see a gradual decline in capital expenditure that will give a huge boost to its free cash flows moving forward.
There is upcoming upgrade to 5G.

(B) Anchor shareholder Vodacom and Vodafone PLC will be there to ensure good corporate governance is still adhered to in Safaricom PLC

(C) We are gradually moving to a cashless society and Safaricom Mpesa will take advantage of that. COVID 19 is just a catalyst to the inevitable cashless society in the future.
Mpesa has got a hit with closure of Till Numbers/Lipa na Pesa numbers in travel and hospitality industry due to covid-19

(D) Safaricom is yet to monetize the huge data at its disposal.

Comments and Responses:

(E) If Ethiopia opens its borders to new entrants in telecoms like it's working on, Safaricom will use that as a new market, new opportunities, on a populace almost double Kenya's size.

There could be some good cheese there.
Safaricom is going to Ethiopia through a consortium,meaning it may not have 100% ownership in the entity.This has the effect of reducing the size of the cheese.
If they bid to buy a stake in Ethiotel the maximum shareholding they will get is 40%.


(F) Safaricom is always innovating, now working on some other financial products with new players. Think newspapers, and the metering solution with water companies.

Comments and Responses:

Lots of assumptions and predictions about its future growth and earnings.

Its current value is far above its real value though.

It's P/E at Kshs 29.70 is 24.9 (using EPS average of 1.19 for the last 3 years).

P/B at the same is 8.3, using the latest book value/share of 3.57.

While it may yet realize your projections or even surpass them, it is already being traded at a price that would need it to grow its book value/share by 554% ( to attain book value/share of 19.8), in order to be reasonably priced (that is a P/B of 1.5 at most) and at the same time grow it's EPS to 1.98 in order for its P/E to be 15 at most at the price of 29.70.

That's a 66.3% increase. Again, maybe it will do that.

But anyone buying it at 29.70 would need to realize that they are speculating on its future, not buying it's present.

The current prices reflect optimism about the company/stock that most investors share.

In the end, the market will likely correct itself.

This is usually true particularly concerning stocks that have shown very great growth.

Comments and Responses:

Only two assumptions made here:

1.Safaricom future growth in free cash flows

2. Safaricom future multiple of free cash flows.

Is that what you call too many assumptions?

Discount rate of 15% is absolutely your business, whether you use 15% or 20% or 50% it's up to you.

2. Safaricom average PE ratio for last three years is 1.59.

Safaricom current earnings per share is 1.84. So you may need to revise those projections on 66% growth in earnings per share to Kshs 1.98

3. Price to book value ratio is of little relevance to Safaricom given we have a lot of intangible assets in Safaricom like Mpesa, which is not found in Safaricom books plus Safaricom massive data on Kenyans etc.

Additionally, price to book value ratios should take into account the return on equity and return on invested capital and really a price to book value ratio of 1.5 assumes Safaricom return on equity and return on invested capital is around 13%, which is really unrealistic since both are over 45%.

Comments and Responses:

How much return one wants from the share is their own business.

You actually made only 2 assumptions. So, a more correct term would be that the assumptions are big, not many.

The biggest of the two being a prediction on its price in 10 years’ time. The further into the future one predicts, the more unreliable the prediction.

To put this into perspective, from the time of its IPO to now, the price has increased by 509%, a phenomenal increase that has now outpaced earnings by 16.5x (using a price of 30.45, EPS of 1.84).

For it to reach 118.80 from a buy price of 29.70, it would need to grow by 300%, another phenomenal increase.

I think any prediction on the market's behavior at any time is extremely hard to realize.

On the free cash flows, it's a prediction based on the decisions of management that is sure to change significantly over a decade, as well as on the decisions that management makes in a very fast-changing business environment.

On the EPS, I used the average from 2017-2019. Not 2018-2020 because I'm more conservative about performances.

Source: Facebook.

Ericsson
#359 Posted : Wednesday, June 24, 2020 3:51:47 PM
Rank: Elder


Joined: 12/4/2009
Posts: 8,557
Location: NAIROBI
https://mobile.twitter.c...768341282590720/photo/1

No transaction fees for transfer upto ksh.1,000 extended till December 31 2020
watesh
#360 Posted : Wednesday, June 24, 2020 5:46:11 PM
Rank: Member


Joined: 8/10/2014
Posts: 824
Location: Kenya
Ericsson wrote:
https://mobile.twitter.com/DumeSingh/status/1275768341282590720/photo/1

No transaction fees for transfer upto ksh.1,000 extended till December 31 2020


That Ksh5 billion in lost revenue is about to turn into Ksh20 billion
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