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The East African : April 28th 2014
52 APRIL 26 - MAY 2, 2014 BUSINESS, MARKETS AND FINANCIAL ANALYSIS THE MARKET WHISPERER EQUITY MARKETS (WEEKLY CHANGE IN BENCHMARK INDEX) NSE 20 Share Index Kenya 4,956.78 0.72% (CUMULATIVE MOVEMENT) DSE All Share Index Tanzania 2,017.23 0.96% USE All Share Index Uganda 1,532.00 2.24% RSE All Share Index Rwanda 145.42 0.53% JSE All Share Index 49,009.23 1.67% South Africa NGSE All Share Index 38,943.44 Nigeria - -0.84% MTN p≥ofits ≥ise amid data se≥vices boom D ata is the future cash cow for African telecoms. Take South African telco MTN, which reported its performance for the three months to March 2014 last week, for instance. Although it didn’t report ac- tual country numbers, the company revealed growth figures that underlined the growing prominence of data services. In Sudan and Uganda, data revenues rose 127.2 per cent and 67.7 per cent, respectively, and now contribute 11.7 per cent and 11.3 per cent per cent of the firm’s net earnings. Most important, however, is the fact of the still limited use of data services in the two countries. For example, the company estimates that only half of its customers in Uganda use mobile money though the product now accounts for half of all revenue derived by the firm from its data segment. Again, only about 30 per cent of the country’s citizens use the Internet. In Rwanda, out of MTN’s to- tal subscriber base of 3.5 million, only about one million use mobile money services. The rise in data revenues, combined with its low penetration, looked at alongside stagnating voice revenues in most customers for the money transfer service rose by 19.17 per cent to 18.15 million. In Uganda, the average rev- enue per user (ARPU) fell by 13.5 per cent despite the rise in data use, suggesting that voice revenues fell on account of price wars or that the new customers spent less money, dragging down the average ARPU. The growing usage of mobile money in everyday transactions and the deepening penetration of smartphones offer a clear forecast of what role these services will play in growing the bottom line. Safaricom has introduced Lipa na M-Pesa service through which subscribers can pay for basic goods and services. But it is the growing use of Rise in data revenues, combined with its low penetration, looked at alongside stagnating voice revenues in most African countries, presents opportunities. African countries, presents opportunities. For example, in the six months to September 2013, Kenya’s Safaricom reported that voice revenues grew only 12 per cent compared with 30 per cent in non-voice services. In fact, M-Pesa revenues jumped by 19.85 per cent to Ksh12.5 billion ($145 million), while the number of registered Subscribers at an MTN Mobile Money tent in Uganda. Picture: File smartphones that could act as the game changer. According to Safaricom, over the past year, 67 per cent of device units sold in the country were smartphones — it is estimated that 100,000 such phones are sold in Kenya per month. Now, considering that 90 per cent of all Internet users in the country access the Web through phones and that smartphones consume more data than a feature phone, the potential is clear. Family Bank ta≥gets tie≥ one status as its p≥ofits soa≥ Equity Bank did it. But can Family Bank, a Kenyan mid-tier lender, replicate the former’s success and break into the big boys club? Peter Munyiri, Family Bank managing direc- tor, believes it will soon be a tier one bank — with an asset base exceeding Ksh150 billion ($1.7 billion) — setting a timeline of three years. This forecast is hard to dispute when the bank is posting such robust numbers. Its reported pretax profits rose 106 per cent to Ksh641 million ($7.36 million) from Ksh311 million ($3.57 million) the previous year, though the loan book expanded by a relatively disappointing 6.4 per cent to Ksh30.4 billion ($340 million) as at March from Ksh27.9billion ($320 million) in December. In the 12 months ending last December, the bank’s loan book grew by 56 per cent to Ksh27.9 billion ($320 million) from Ksh17.9 billion ($205 million) in 2012. Net earnings doubled to Ksh1.2 billion ($13.79 million), compared with Ksh561 million ($64.48 million) a year earlier, helped by increased income from loans. But, while the profit growth is impressive, con- sidering that it has over the past year doubled its branches and that the 2013 industry average was 16.8 per cent, the bank will need to work harder to outperform the industry on all fronts. One particular area Family Bank continues to lead the sector in is the use of IT to deploy new products. It has launched mobile money under the Pesa Pap brand and is active on the agency banking platform. The bank now plans to integrate its IT platform with the government registry, making it easier to identify customers — a an industry first. It is currently trading at Ksh45 to Ksh50 ($0.51- $0.57) over the counter. Considering its growth rate and the fact that it plans to list within the next three years, the price seems a bargain. Published at Nation Centre, Kimathi Street, and Printed at Mombasa Road, Nairobi by Nation Media Group, Box 49010, GPO Nairobi, 00100. Registered at the GPO as a newspaper. Nairobi Office, Tel: 3288000, 211448, 337710, Fax 214531, 213936. Dar es Salaam Office. Tel: 2119657/8. Kampala Office, Tel: 232771, 232772. Fax 232781 Download free QR Readers from the web and scan this QR (Quick Response) code with your smart phone for pictures, videos and more stories Ba≥≥ick and Newmont in me≥ge≥ talks BARRICK GOLD, the Australian explorer with operations in Tanzania, is negotiating a merger with Newmont Mining Corporation that will create the world’s fifth largest gold mining firm. Reuters reported that al- though the talks had broken off earlier last week, the parties had resolved several differences and remained keen on a deal. It quoted sources as citing agreement on a 14-member board for the new entity, with seven nominees from Barrick’s board, five from Newmont’s and two new ones. However, certain specifics around the new board members and disagreements around who gains control of the key corporate governance committee are a potential sticking point at this stage, said the sources. This is the third time that the two miners with large overlapping operations in Nevada have contemplated a merger within the past seven years. It is estimated that combining the mining giants’ operations could lead to nearly $1 billion in annual cost savings.
April 21st 2014
May 5th 2014