Safaricom will release its FY20 results on 29 April. We expect 13% yoy growth in EPS to KES1.77 with a DPS of KES1.41.
Our revenue growth forecast of 6% to KES265bn is driven by 20% growth in M-Pesa revenue and 11% growth in mobile data revenue. We are bearish on voice and SMS revenue, declining at -1.1% and -10% respectively.
EBITDA margin forecast expansion from 50% in FY19 to 53% in FY20 is based on the positive effects of IFRS 16 and continued moderation in network-related expenses. In addition, EBITDA continues to benefit from a slowdown in M-Pesa commissions paid out due to reduced incidences of cashouts.
We expect EBIT growth of 16% to KES103bn, which is 6% above the top end guidance of KES93-97bn.
Key themes we aim to discuss with management include:
- An update on Safaricom's move into Ethiopia
- Overdraft service Fuliza's operating performance (KES2.45bn expected in FY20)
- Impact of M-Pesa tariff cuts on M-Pesa revenue in FY21 and any plans to extend the tariff reduction past 90 days.
- Impact of COVID-19 on capex and revenue
- Update on measures to increase 4G handset penetration and data usage