Safaricom PLC (SCOM) Earnings Call Transcript & Summary

Good morning, good afternoon and good evening from wherever you're joining us from, and welcome to the Safaricom PLC Pre-close Period Cost Call. My name is Caroline Wambugu. I'm the Head of Investor Relations and Financial Planning Analysis, and I'll be moderating the discussion. And just to let you know that I'm actually logging in from our Ethiopia offices in Addis Ababa. We have our CFO, Dilip Pal, who will be making introductory remarks shortly. Thereafter, we'll give you a chance to field your questions, which we will address. We also have our CFO from Ethiopia, Stanley Njoroge, joining us on the call. Before we kick off the session, I would like to speak through a few housekeeping rules. Please ensure that you have joined the session with your full names for ease of identification when you post your questions or comments. And if you haven't, you can rename yourself now by hovering the cursor over your name and clicking the Rename tab on the drop-down. [Operator Instructions] And in staying committed to our promise on diversity and inclusion, a live transcript has been made available for the comfort of anyone with hearing difficulties who has joined the call. You can access this by clicking the View Transcript top at the bottom of your Zoom application under More Options. This will allow you to keep up with the conversations in a more comfortable manner. Finally and in case you require any assistance from us that is not directly related to the discussion, you can write to us via the chat platform, and the Investor Relations team will be on hand to assist you. Allow me now to welcome our CFO, Dilip Pal, to kick off the session. Dilip, over to you.

Thank you, Caroline. Confirm you can hear me well.

We can hear you, Dilip. Please proceed.

Excellent. Good to see you from Addis, Caroline. And Stanley, welcome on the call. And yes, even if you're looking absolutely okay. The video is clear and also call was very clear. So well done. All right. Again, once again, welcome to our call. Morning, afternoon and evening based on where you have joined today. It's my absolute pleasure to talk to you today and engage. This would be our the last conversation with the analyst investor community before we get into a close period pretty soon. And of course, we'll have further discussions coming up from once we release our full year results in May, and there will be more conversation engagement. Today is about -- and just to give you a sense of where we left when we had our half year results release and subsequent many engagements with some of you in person in some of you through virtual mode and some of the roadshows that we have done; and also most importantly, Safaricom's first-ever Investor Day on 15 -- on the last 15th of February. So you probably have a fairly good idea about when you left on 15th of February where we spoke about how we are executing our strategy, what's our big bet and how we are performing on those things. So I just want to give you a few quick summary of what I thought it would be important for you to know. When we left our half year results discussion, I think one of the messages that we passed on was that we started very well in the quarter 1. And then we have seen a decline in our performance, a decline in our top line in quarter 2. And also combined with the inflation and the Ukraine-Russia war, where we have seen some significant headwinds in quarter 2. And we also spoke about our Ethiopia launch. I think that was the early days. And then what you've also spoken about is the some of the macros which were not necessarily going in the right direction. I think what I -- of course, you are not going to talk about numbers, but just to give you some flavor of what we have seen in a post-election stability and also formation of the new government, some of the clarity those are coming through and some of the things that has really pushed the performance. And we have seen an improved performance coming in the second half. And also reminding you that you have seen that the return to charging for wallet to bank and Bank to wallet also came in January. So that was a big relief, which obviously, as you recall, was putting a lot of pressure both on the top line as well as on all the bottom line because of higher commission costs. Then we spoke about Ethiopia. I think Ethiopia, you probably have some more updates on -- questions around it. But I think overall, Ethiopia is going as the conversations that we had and the team, the way they have shared, I think from the Ethiopia address ship team on our Investor Day, we are going as per plan. On macros, I would say it's a mixed bag. Inflation was cooling off based on some of the rate intervention that Central Bank has done. But we have seen in the latest month, we're in a kind of a -- it was coming down 2 months and then we have seen it increase, and that's not necessarily in the right direction. On currency, I think we have seen a depreciation -- a faster depreciation during the last few months than what we have seen before. So the currency still remains a concern. And I think overall, on the growth outlook, of course, we spoke about the FY '22 -- FY '23 would be a lower growth than FY '22. I think [ TowerCO ], it was 7.5%. Expectation is that probably to be 5.5%. And the current estimate is that probably it will go down to about 5% in the outer-years. So not necessarily a very good outlook on the macro side. But I think some of the important things that you have seen that we have launched quite a few new initiatives, and we'll speak about all of that when you have our financial results, including a key government-led initiative where we have provided the platform support, something called Hustler find. You may have noticed that, that also has seen some significant traction in terms of customer engagements. Yes. On Ethiopia, I think I mentioned about it. I think we are executing our plan. And on -- the current focus is to make sure that we keep on accelerating our rollout, and that's the #1 focus, while supporting with the distribution to make sure that our products are available and providing the customer experience, customer services with products that are very important for the lifestyle -- the digital lifestyle that you're talking about for Ethiopia. So I think that those are the things that I wanted to just say in the beginning, and then, of course, we'll open up for Q&A. And we'll hopefully have good conversation today. In case we run out of time, I'm not able to answer all your questions, but we'll still make sure that you have all the answers from our Investor Relations team. So thank you very much for joining the call, and back to you, Caroline.

Thank you, Dilip. Thank you for that great overview that you shared with us. Investors and analysts, I'm still waiting to see some questions trimming in. So, so far, I have not received any questions. So happy for you to get into the Q&A tab, and please position your questions to us so that we can address them. At least you've gotten a good feel on how the macro space is panning out in the country and some of the improvements -- so should I say some of the intervention that the government is putting in place to ensure we have an improved state in the medium term.

I see -- sorry, let me see a question here. Yes, I see a question, Jason. And Dilip, this is a question to you. So did you mean 5% for outer-years FY '24 or FY '23, 5% growth?

Caroline, I think we spoke about FY '24, right? That's the 5% we're talking about, yes. That's the current estimate.

Correct.

We are likely to close at around 5.5%, I think, 5.3%, which is basically the calendar year, not the financial year.

Okay. Thanks for that Dilip. Another question here from Jinesh. Jinesh wants to know -- first, he wants to thank the Safaricom team. Thank you for that, Jinesh. And then has there been any improvements in FX availability? And are you able to source enough dollars for your needs, Dilip?

Thank you, Jinesh. On availability, I think -- I won't say that there has been a lot of improvements, but I have been told very -- in very recent time, it seems that there have been some a downward movement availability at a probably a lower rate than before. But these are all recent trends, and I think these are -- there could be some speculation going on, on some of the government initiatives. But honestly, I don't want to spend a lot of time on that. But we have -- you can't just go by a very recent development. But from our perspective, the ForEx need that we have, I think we managed to take care of that very well. I think over a period of time, we know our CapEx cycle, we know our payment cycle, especially on the foreign payment side. And then, of course, we know our investment cycle in Ethiopia when it is coming in. So we could access the -- we could actually accumulate the required ForEx to enable those things to happen. And more importantly, I think what -- I did mention about that we do have -- we do bring in quite a bit of foreign exchange to the country. And we can also participate -- Safaricom as the parent company can also participate in. So availability is not necessarily the issue. I think the rate was probably the bigger issue than the availability. So that's how I would say it.

Yes. Thank you for that, Dilip. And I think that also addresses your question, Rohit, with regards to the USSD availability. So that has been handled. We'll take the next question from Anshul Sharma. And Sharma is asking, there have been rumors about changing leadership at the CEO level with some pressure from different quarters, be it government, Vodacom, et cetera. So that's a sharma from HSBC. I think just generally make a comment around the change in leadership because the same is also coming from -- that is Mishra on any comments on recent news flowing regarding CEO tenure and any conflicts with government on this matter. Any comments from you, Dilip, on that?

Yes. So I think what has -- okay, let me just clarify this that in the past, the CEOs have been expatriates. And as you know, the expatriates typically come with a fixed tenure. But unlike our current CEO, Peter's predecessor, Peter is Kenyan, and he's a permanent employee of Safaricom. And that's how his appointment was made and approved by the Board. And he was not bound by any specified tenure in his employment terms. So that's what I wanted to confirm. I think this was clarified also by Peter himself, and you may have seen his comments. So I just want to reconfirm that he's not bound by any tenure. Of course, he's -- it's the Board appointed Peter, and he is the partner and employee of Safaricom.

Thanks for that, Dilip. A question here from Mishra. I think the first part of her question actually was what are the reasons for the recent stock price movements? Yes. So maybe I can actually take that one, Dilip, and just make a comment around...

Yes, Caroline. Go ahead, go ahead. Yes.

So what we've seen with the stock price movements, it's largely been external-led in the sense that there's been a lot of anxiety around the FX in the country. So both with regards to the depreciation aspect of it, and Dilip spoke to that in his opening remarks, and then also to the liquidity aspect of it with the discussions around that being a shortage of dollar in the market. So that is what we have seen as the biggest movement of why our stock price has been coming down, but it's also good to note that it has actually started coming up in the recent past. So that is good news. Because that sort of liquidity and depreciation aspect on FX has driven some foreign sell-ups and thereby driven the stock price down. And noting that the local market also has been given a number of choices on the local market space from an investment perspective with bonds coming in quite favorable because of the returns that we are making that and using that to rebalance their portfolio. So the share price has been impacted by them not taking up the supply in the market. But we are hoping that as we go along, we'll get to see that shifting so that we can have the share price going up as it has been doing in the recent past. So we trust that, that is something that we shall see improving as we go along. And also as the macros improve in the country with the interventions that the government is putting in place just to help correct the pricing on the dollar and, of course, also address the liquidity aspects on the dollar as well from a demand perspective. So that is something we believe in the medium to short term, we shall see an improvement and that, hopefully, will also help to regain market confidence as regards that. Otherwise, from a performance perspective, I think you're familiar with our story, and we've been consistent also from a performance view. So it has nothing to do with what we are seeing on the performance side. It's more macros-led. Dilip, I don't know, would you like to add anything to that or I can proceed?

No. I think you can proceed. You have covered it very well. Thank you.

Okay. All right. Thank you. The next question I see here is from Jinesh. So Jinesh is asking, is FY '24 is still likely to be the worst year of the group from an EBITDA perspective given a full year of losses in Ethiopia? Is the Ethiopia rollout still on track and according to schedule, Dilip?

So thank you. Thank you for your question. The first part of the question, yes, FY '24 will be the worst given the pace of rollout. I think that's where we'll peak in terms of our rollout, so all cost in. It is fair intuition that FY '24. I think on your other question relating to -- yes, we are on track, and we are on track to -- on our rollout plan that we have shared with you during our -- the half year results call as well as, I think, the Ethiopia update during the Investor Day. We are on track.

Thank you for that, Dilip. A question here from Renaldo D'Souza of Sterling Capital is asking, are there any regulatory risks that we foresee in 2023? And is the M-PESA split still a regulatory risk or has that cooled off?

Yes. On the regulatory side, I think the one which we have highlighted before and which is still -- which still remains valid is the mobile termination rate for Kenya. As you know, the current rate which was reduced -- the rate which was reduced from KES 0.99 to KES 0.58 is applicable up to August 2023. So I think the expectation is that there will be revision on that, and we don't know what will be the outcome of that revision based on the study that the communication authority has promised to conclude. So that -- I think that, that will be one of the key regulatory item that we are following. Other than that, I think we spoke about subscriber registration, which is a registration that we have done, but I think we have done quite well. In terms of percentage, we are over 98% of the subscriber KYC registrations. So we don't necessarily see a big risk, but still there is 2% that we need to finish. And we are actively working with the regulator and to make sure that we're able to conclude this. On M-PESA's split, I think what -- I don't want to say much more than what we said before. I think more than the regulatory risk, I think the way we spoke about saying that the company has engaged and started the process of looking at as a group structure, how does it want to operate going forward given that we have now subsidiary -- substantial subsidiaries, investment in Ethiopia and also some of the subsidiaries that we had. I think that's the one we spoke about, and it is not necessarily something that -- we always mentioned that keeping M-PESA with the core business, mobile business, has always helped us. And that position has not changed. But at the same time, we're also looking at an opportunity to see how do you want to see this group structure going forward with the line of business. But I don't want to comment further on this because this is still a work in progress. But at the same time, I want to confirm that there is nothing that we are dealing with in terms of a -- with the regulators asking us to do what -- for a split. This was more of a parliament discussion, and that's how typically linked with the governance conversations that we had before. Thank you. Back to you, Caroline.

Thank you, Dilip. Next question is from [ Amira ]. [ Amira ] wants to know, does our Ethiopia license allow us to do 2G and 3G? If not, how will that affect our rollout in rural areas? And with Ethiopia having lower income levels, how are we planning to tackle the affordability issue on 4G and 5G devices? So 2 questions in 1, Dilip.

Caroline, can you repeat the first part again?

Does our license in Ethiopia allow us to do 2G and 3G? And if not, how will that affect our rollout in rural areas?

Yes. Thank you. So yes, our license does allow us to roll out everything. So we have actually the technology that we are using. And the base stations and the equipment they are putting in have all -- they're all compatible. So -- and that's what you mentioned before that all sites have 2G, 3G and 4G. And we haven't launched 5G. And we do have spectrum but not necessarily something that you want to do immediately. We are to first make sure that we have a good coverage on 4G and 5G can come in the future. So yes, to answer your questions, 2G, 3G, 4G are all going simultaneously. So we are not doing it sequentially. And that takes care of customers who doesn't need data but only wants to do voice, so they can use 2G or 3G. And customers who wants to use mobile data, they are probably using -- they're having a mobile data Internet-enabled device and they're using it for mobile data. On your questions on affordability, yes, affordability is a big part of our strategy, how do we ensure that -- it's always linked with the disposable income and what's the communication budget that normal Ethiopians will have. I think that is always part of the conversation. And therefore, the strategy around how do we address our Urban needs, how do we address the rural needs based on the actual affordability of the customer has always been part of our strategy. Yes, that's one of our key consideration when we went for the bid, knowing very well that Ethiopia's packet income is lower than some of the neighboring countries, yes?

Yes. Thank you, Dilip. The next question is from Samuel, Samuel Njihia of Renaissance Capital. And the question is, how is the resumption on charging of M-PESA to bank impacting transaction activity on that channel? And have we seen any deposit activity normalizing?

Yes. So that's a good question. And I was trying to avoid numbers here. But just to tell you that, yes, we have -- as expected, I think we did model that there will be decline in the deposits. I think what we have seen deposit value coming down around 20%. So I think this was pretty much part of our modeling because as you recall, the way the deposits were climbing, I mean, the starting from the COVID period, I think it has really, really gone up significantly. So the decline was expected. And I think the good -- what we are seeing is also -- as I mentioned about -- return to charging is actually helping us in 2 ways. One is to see lesser stress on the commission side that you have seen in our past, the deposit commission going up significantly because of the volumes. I think that part -- the customers should obviously will look for where is the sweet spot. So this was expected. I think that's one benefit that we're seeing. And of course, there is uplift in the revenue. I think on the revenues, I will talk more about that when we release our results, but definitely it's a positive both on the cost side, on commission, as well as on the revenue side.

Okay. Thank you, Dilip. I see a number of questions and because we shall take off-line the ones especially related to numbers, allow me to skip some. So a set of questions here shared by Davis. Davis Gathinji I'll pick some questions from the set that you have shared of 4. And one of them is, could you highlight the currency split of Safaricom's debt and the management's plan, especially regarding the U.S. dollar debt given the rising interest rate environment? This is with respect to the debt in Safaricom book for Ethiopia. So what are the plans regarding the management of debt given the rising interest rate environment? And what is that split, Dilip?

Yes. Okay. Let me start with that. I think we did mention about -- that we borrowed $400 million equivalent, okay? We actually borrowed $400 million, and then we did this indication locally. And we split that $400 million into 2 parts, 70% in Kenyan shilling, which is about $280 million equivalent of Kenyan shilling borrowing and then $120 million of -- U.S. dollar. The U.S. dollar, we didn't ask for a moratorium, which means that the repayment has already started. And also, we are prepaying based on our dollar flexibility that we have. So I think from a dollar exposure point of view, it's minimal. I don't have the exact number. I probably will talk about that in our results release. So that amount is coming down because we started paying. It's a 5-year loan, half yearly repayment, that has already started. So I think the exposure on our dollar part is quite [indiscernible] -- it's very minimal. As you know, that's the only long-term loan that we had. And we do have our short-term requirement of dollars. We will have a few short-term facilities that we use time to time, but those are -- those get unwind as and when we have the dollar availability. So these are not necessarily a big amount. Back to you, Caroline.

Yes. Thank you very much, Dilip. The second part of David's question says, if you could kindly update us on the tentative time line for Safaricom with regards to the payment of the Ethiopian M-PESA license as well as the tentative M-PESA rollout date. And further on this, will we be seeking to compete on price, meaning lower margins on this revenue line? So some color on M-PESA license in Ethiopia.

Yes. I think that's a fair question, and that's something that we know that we spoke about it. And we did mention about the engagement that we had with the government and the regulator, the parliament process and final approval that has come. And I think you may have seen also the payment in terms of the amount that is supposed to be paid out. So we are going through our last level of governance and therefore -- and also the other technicalities of -- to operationalize it more as in -- I'm talking about more as a structural side of it, but that's what we are now currently undergoing. So I still -- because I don't have a license in our hands, so I don't want to really give you a date when it will be available. But I think most of the work has been done. I think the final governance and the procedures have now been in the stage. The -- in terms of pricing, we don't want to comment on pricing because I think it's -- we don't comment on pricing. I think we'll be -- only thing would say that it will be competitive, and we will make sure that we provide customers the access and the services that we believe will make a big difference to our customers early launch. So price, I think I would only say that we'll be competitive.

Thank you, Dilip. So Davis, to your other 2 questions, we'll be able to get back to you on that. And especially when you talk about Safaricom Ethiopia's gross and net adds, I know we highlighted to you the gross adds during the Investor Day, as you've rightfully put. So you need information on the net adds and possibly also the levels of churn. So we'll be able to share a lot more information with you as we release the full year results for Ethiopia in May. And with that, even the level of Change will be disclosed, and that will help you also to model better for the Ethiopia business. Allow me to move on to the questions from Faruk, and Faruk is asking what competitive trends are we seeing in data or voice in Kenya? What competitive trends are we seeing in data and voice in Kenya?

I think I would say market is quite competitive but not necessarily through a lot of headline price change. But we do see a lot of customer offers are going on. So on mobile -- on the mobile data side, I think the -- I won't say things have -- worsing or things have worser than it was before. I would say more of stability, but there are a lot of customer offers which are going on -- as everybody is trying to get the new customers, trying to get them into their networks, there's a lot of offers which are given to the customers, not necessarily to headline pricing. I think on voice side, I would say it's more stable. And I think you may have seen the results. I think it is -- Caroline, confirm. This was up to June or September. I don't -- what was the period that we have the latest CI report?

It was up to September.

Up to September. As you may have seen that we actually have gained share also on voice side. So voice, I would say, stable. I think data, a lot of offers which is supporting basically on the customer acquisition as everybody is trying to get new customers.

Thank you, Dilip. Second question from Faruk, how is Safaricom benefiting from its Ethiopia consortium partners regarding going into a market which is new to Safaricom?

Yes. I think we spoke about that our consortium partners have -- all have different level of different types of experience. For example, starting with Sumitomo, they have a lot of experience in rolling out digital services also in telecommunication. And as one of the key consortium partner, they bring in those, whether they are through the Board process or through the people that, okay, the other things that we have also taken -- have taken actually the benefit of getting people from this respective consortium partners in an area where we needed support. So there's a lot of support that comes in specializing in building capability that is what we needed in the beginning. I think from a Vodacom side, as you know, they are a very important part of consider them, although they have a lower share, but I think they bring in a lot of that because of their presence in many countries in Africa and also their understanding of how the market actually operates in Africa. So -- and BRI, of course, have their own understanding of investments and how to operate and also some of the conversations when it comes to regulatory and other affairs. I think they all have brought in respective strength on to the table, be it through the capability building in the people they have given or in the capability building in the way we are engaging and also bringing in that insights, which actually is very much appreciated. So we are very happy with the progress that we have made in bringing everybody together in the consortium.

Yes. Thank you, Dilip. And that question from Faruk and last, what ROI dilution to the group is expected even when steady-state is achieved with Ethiopia?

Yes. I think -- on return on -- I think if you are talking about return on capital employed, I mean, you have all the information for the past period and you have the information based on -- you can do the calculation based on the guidance that we have for FY '23. But of course, we don't talk about future and we don't guide for the future. So I'm sure there is a way you are able to calculate that. It is fair to expect because -- and we expect to expect dilution return on capital employed consolidation for Ethiopia. I would imagine the Safaricom return on capital employed will still be steady. But Ethiopia, will dilute, but that depends on how you're modeling. And of course, we don't talk about -- we don't guide for the future. So that's how I would like to see. But overall, you could expect dilution, but that will because of Ethiopia until the time they become EBIT-positive and therefore growing on EBIT as well.

Thank you, Dilip. A question from Rohit Modi of Citi, so please could you give us any color on OpEx pressure and how you see margins evolving in FY '24 given the high cost of inflation?

Rohit, that's a very good question. I think for us, the biggest contributor has been on the OpEx side, I mean inflation, of course, but biggest contribution has been on the cost of fuel. What we have mentioned to you during our H1 results release is that the full impact of fuel increase -- fuel cost increase didn't come through in the H1 because some of these changes actually happened just 1 or 2 months before we did the -- before September. So that's one big element both on the cost of diesel where subsidy was removed and also the cost of power where power cost was increased. But I don't know that you have seen or not, there is another proposal where the cost of power is likely to be again going up. But I think this has not gone through a full approval process likely to be. But given where the countries and given the cost of power as one important factor. So we need to watch out in this space. I think cost of fuel has been one of the biggest contributor. And second contributor has been also the currency side comes to the precision. So I will say that these 2 areas will continue to be under pressure and that it's still there. I think potentially, we did some cost-correction measures in H2. So I've probably -- the pressure still is on, but we are trying to make sure that our productivity initiatives are helping and supporting by -- in terms of cooling down of OpEx. And the objective is to try and bring it below inflation, but that was not the case, I think, in H1. So yes, I think if it's stressful. And as I told you, mostly coming in from the fuel price increase and also from the currency depreciation. And some of the costs, I think, which are linked to the inflation that we need to incur locally.

Thanks, Dilip. A question here from Anshul Sharma. So Sharma is asking that Ethiotel which has been pretty aggressive in pricing and customer retention for Safaricom license in Ethiopia -- sorry, Ethiotel has been pretty aggressive in pricing and customer retention for Safaricom license in Ethiopia. How does that impact our break-even targets in any way?

Yes. I think we spoke about that also during our H1 results and also I think Investor Day. So I think on price-wise, in any case, the pricing level in Ethiopia was quite low given -- even if when there was only one operator. And we know that Ethiotel has made some pricing correction. So the way to look at is that we'll continue to be competitive. And we did reiterate our break-even points what we spoke about before that we reconfirm our break-even point, including during Investor Day. So that has not changed. So I would only say that we remain competitive. And from a pricing point of view, because of the developments from the Ethiotel side, it hasn't changed our milestone in terms of breakeven.

Okay. Thank you for that. Question here from Mishra, a very good question, Mishra. What is our view on the third entrant in Ethiopia, Dilip? And would Safaricom be interested in that 40% stake available for sale?

Yes. That's a good question. I think -- yes, I can definitely say that we have no interest in 40% of that stake because if that was the case, that's something which was also part of -- if you recall, that was available even before that as part of the discussion or the conversation that the government Ethiotel was having with many potential investor. So that is a no. On third entrant, the -- I think what we -- if you recall, what he mentioned about is that the government in to Ethiopia is evaluating or going with the assumption that at some point in time which we don't know there will be processed by who they like to go for the third license. And so we don't know the time line, but our assumption is that is going to take some time before the third entrant comes in. But there is a -- there was a report, I think, wherein government of Ethiopia said that 40% privatization of Ethiotel and also the third entrant coming in is very much on the table, but we just don't know the time line.

Thank you. Thank you, Dilip. Modi is asking about the tax treatment in Ethiopia, and he would like us to give more color on the overall tax treatment and whether we'll continue to book deferred tax asset on current losses.

Okay. Stanley, do you want to comment here on the treatment of deferred?

Let me come in here. I think the treatment of deferred -- I mean of losses is really dependent on what we discuss, what we review and the possibility and how soon we are expecting to turn to profitability. And that is guided by accounting standards. So I think the only thing we can say is that we are having those conversations with auditors. As and when we feel that it's the right time, that booking will be made. I think that's the best thing we can say for now.

Thank you very much, Stanley, for that. The next question I see here is from. [ Sakib ] [indiscernible] Sakib is asking Dilip. Presumably, the improvement you mentioned in the second half of this FY '23 relates to M-PESA and the non-M-PESA remains under pressure in terms of revenue. Is that too pessimistic a view to go with?

No. I think the way to look at it would be we have seen improvement. We have seen improvement and level of activities and engagements in H2 compared to H1. But M-PESA in Q4 also got benefited, as I mentioned, about on return to charging on bank to a wallet and wallet to bank. Of course, at a much lower rate than before, and that is what we always mentioned to you that we look for opportunities to optimize our pricing to make it more affordable, and that's what we have done there as well. So I will say, yes, M-PESA for sure because of return to charging and also I think a kind of improvement in the overall sentiment. You recall that Q2 was significantly depressed because of macros and everything else and also because of the election. So post-election stability, post-election and government, 4 million, getting a much clearer view on how the -- how things are happening in -- I think it also helps. So I would say, yes, M-PESA for sure, but we have seen also improvement in others as well.

Thank you, Dilip. I see your question, [ admira ], on has there been any reports -- or rather there has been reports of a class lawsuit about the use of deposits for lending. And you're asking how credible that lawsuit is and the amount demanded to the billions that you put it there. I think just by way of responding, we have not been served on this legal suit and so would not want to comment on that. We would rather refrain from commenting on it until the matter or until we have the right time for us to be able to speak to it. So that we don't preempt any results of the process, this being a legal matter. And I'm sure you appreciate that it has to follow the legal process. So we have no comment to make at this point until that matter is closed, then we can be able to speak to any facts or lack of facts thereof depending on the outcome. I don't see any other questions that we have not addressed. Happy to take more questions. We have a bit of time. Sorry, I have just seen your question, Shruti. So Shruti of EFG: "Thanks for the call and for the very impressive Investor Day in Nairobi last month." Thank you very much, Shruti. "It's been an event for a few months. So what milestones do you expect Safaricom to reach before the end of this year?" I trust you mean in the next 1 week. "And any top specific examples would be very helpful." That's from Shruti of EFG, Dilip.

Yes. I think we started Ethiopia -- I think Ethiopia has some -- I mean, of course, it is not a lot of time, but they do have a certain milestone in terms of number of bases that they want to allow, the number of customers they want to hit. These are very internal numbers that I really don't want to share, but they are -- that's something that we are very -- as I say, starting with the rollout and then, of course, the number of customers because that's important. And for Kenya, I think I would only say that we were looking forward when we closed H1 that H2 comes better than H1. And as I mentioned during the call, yes, I think M-PESA return to charging definitely helped, and also the overall economic sentiment improvement and stability in the post-election period has also helped. So yes, I would say we do have our eyes on numbers that we look at on a daily basis, and that's what we are looking for. There is nothing more than what we say in terms of the specific milestone that you are achieving other than what we told you before.

Thank you, Dilip. Next question here from Jinesh. Jinesh is asking, will mobile money be a separate legal entity to the GSM business in Ethiopia? And in that case, will we report mobile money separately from -- for Ethiopia?

Jinesh, I suggest you wait further. I don't know that -- unless it is in public domain. Stanley, would you like to comment on that or we wait for the...

I think we wait. But I think it's important to note that whichever structure, everything anyway has to consolidate back to Safaricom whichever structure there. So we are still discussing a bit of structures. And once the appropriate time, we'll be able to give guidance in terms of how we'll be operating.

Thank you, Stanley.

Okay. Thank you. Thank you, Dilip. Thank you, Stanley. Still waiting for more questions to be posted. We do have about 30 minutes to go to what we had allocated for this session. So my request is we make use of it to get as much information as possible from our leaders. Modi, I see your question, but I think this had been addressed by Dilip [ Aria ] on -- with respect to the key revenue growth drivers in the near term in Kenya and whether we expect any slowdown in growth rates in each or any of the segments, be it voice, data and M-PESA. I know, Dilip, you had addressed this, but maybe just a quick recap.

Yes. I can do that, Caroline. I think from a growth driver, we spoke about that consistently in our previous calls as well. The -- our future growth we spoke about coming from mobile data as we believe that is still at a very early stage. We spoke about fixed, which is still a small part of the business, but we are accelerating. So fixed will continue to grow. Then we spoke about mobile financial services, the overall M-PESA ecosystem and the expanding new offerings, new products and services that we are -- we have launched or will be launching. I think those growth drivers will continue to be driving growth. In addition, we spoke about our ambition actually -- during Investor Day, we spoke about our ambition in Enterprise. Enterprise is a very small part of the business, but it has grown well. I mean this is the only part of the business which actually outgrown in the -- when we are growing, it has grown much faster than the growth that we have seen in the consumer business. So -- and we are still probably scratching the surface in terms of what you want to become. You have seen that coming through during our investor presentation. So there's quite a few growth drivers. And Ethiopia, of course, will give the top line at a consolidated level as Ethiopia has launched. And their numbers, they are adding more customers, and we will start seeing a revenue uplift coming through. I think on the other side, the one which is under pressure is voice. And I think we have consistently been messaging you that voice will be under pressure, and we do believe that doesn't change. But what actually -- what we also mentioned about -- we do see customers usage elasticity and then even when we are doing the price correction because we are -- we had a significant premium with the competitor and that we have been -- we are adjusting in about a period of time. And Peter in his presentation during Investor Day have shown how we have been adjusting our prices both for mobile data and voice. And that clearly shows that there is a demand in this market, even on voice. So this is not like other saturated European market where we don't see any demand -- the demand elasticity on voice. We have seen that overall volume still growing. So I would say -- but at the same time, I would consider that to be a declining trend. We talked about low single-digit decline in the near term. And messaging, I would say, I think we had significant decline in the past period, but we have taken some steps more so in the way we are offering our customers with bundle and a lot more offers because we know that this is still an important component. And Kenyans love SMS messaging. You will be surprised to see how many people consider a message to be more reliable than a WhatsApp message. An SMS is more reliable. So we do see a lot of customers still using it, and we try to make sure the rate of decline goes down. You'll probably see better results in messaging when we release our results. So our growth drivers haven't changed, and I think we continue to drive those good engines as we go along. Thank you. Caroline?

Yes. Thank you. Thank you, Dilip, for that recap. Sharma, I think the question on the CEO has been answered. So that's okay. Linet Muriungi of Absa is asking, please guide on CapEx. Will Safaricom maintain its 5-year CapEx guidance of the $1.5 billion to $2 billion for Ethiopia? And she goes on our head to speak about how we overcome the U.S. [ discarcity ]. I know you had addressed it as well, Dilip, but maybe you can speak to it as you answer her question.

So Linet, I'm assuming you're talking about Safaricom Ethiopia. And I think as late as February 15, to reconfirm our medium-term outlook, not the guidance, I just want to correct it. We don't provide guidance beyond the 1 year, be it for EBIT or be it for CapEx. And those are outlook. Yes, I think that doesn't change, Linet. I can confirm you that. As late the 15th of February, Investors Day, we have reconfirmed the medium outlook for Safaricom Ethiopia CapEx.

Thank you, Dilip. [ Zintetwala ] is asking, you mentioned some promotions in mobile data in Kenya and reduction in our market share. Does this mean you're seeing a slowdown in data revenue? Or has usage continued to support revenue?

No. We haven't seen a slowdown in revenue. I didn't say about slowdown or loss of market share. Actually, I spoke to -- I said we gained share. On the offer, what I want to say, I think in the context of competition that how do they -- or there is a headline price change? Or is it more of offers one-to-one customer offer. So what I said there is intensity about customer retention and customer acquisition. So there is a lot more offers that goes to retain customers or to attract new customers. That's what I mentioned, not necessarily a lot of headline price. And we spoke about -- in the past about customer value management proposition fueled by big data. We know our customers very well with what we call the 360-degree view of our customers. So we are able to actually tailor-make our customer offer to enable customers to make sure that we have an ARPU upside. Yes, usage is still great as expected. And -- but I haven't spoken about slowdown in mobile data.

Right. Thank you, Dilip, for that clarification. I see a question here which I think I had skipped from Jinesh. When is M-PESA going to acquire a deposit-taking license? I think this is a common question that comes even to us and Peter. Dilip, when?

Okay. I think when question comes -- I know this you have asked me many times. When question comes in when we announced that you like relax deposit-taking license, we haven't stated such thing. Having said that, we always review our strategy and what is important for the customers. And if we have such proposal and if the company and the Board has taken such decision, we'll definitely let you know, but there is nothing at this point in time as we speak.

All right. Thank you, Dilip. I don't see any other question, but I think we can sort of address -- I think we've addressed a number of the questions that had come much, much earlier.

There's one thing I wanted to make sure that if any of the analysts or the investors have still any clarity around because I know the financing cost that's fixing Safaricom Kenya balance sheet and, of course, which you consolidate, the cost that you are booking because of the financing cost. We do show that as a separate line because that didn't exist before. Now we have this. So when you do a like-for-like comparison, we do show that. So when you do the consolidation, please make sure that if you have any clarity, if you have any questions around it before we get into the close period, my suggestion be that please reach out to our Investor Relations team. They can very well explain you to make sure they don't make any mistakes or you don't make any -- when you are looking at your forecast for FY '23 closure numbers as well and, of course, for the future years.

Yes. Thanks, Dilip, for mentioning that. I think that came out quite -- it was quite visible actually when we received the estimates from the analysts. So happy, as Dilip has said, to support and guide. But I trust also the clarity that Dilip has given on the call as regards to the debt that is seated in our books and also help you to be able to model that better. Dilip, if you could also make a comment around IFC. So the potential equity and debt investment in GPE because that also came as a question as part of this pre-close call that they wanted to just hear. Do we have any status update to share on that?

So thank you. Thank you, Caroline, for reminding me. What we have said so far and what we have done so far in what IFC has gone ahead, and I think you have seen those in the public announcement in terms of their intention to put in up to USD 157 million as equity contribution over the investment period and also giving capability of about -- directly from IFC of about USD 100 million debt facility. So -- and we were actually going through the process because this also requires a lot more fine-tuning and also understanding implication, everything about put all by the consortium members. So I think you've seen their announcement of their intention, but we haven't concluded on that, that I can confirm you, whether there is any agreement or no. We don't have an agreement as we speak, but we are still in discussion and probably at our final stages of those -- formalizing it, if at all, convert into equity participation and debt contribution. So as soon as we finalize, if we can, and as and when it happens, we'll definitely let you know. But as we speak, we are still engaging with IFC to see that whether there is -- this can indeed convert into finally an agreement at some point in time. We are still in discussion.

Thank you very much, Dilip. I don't see any other questions on the queue. Faruk -- yes, there's a question from Faruk on the chart on the extent of the impact of net income -- impact on net income for every percentage change or hit on the shielding against the dollar. Faruk, allow me to get back to you on that one. I think we can liaise with you on that off-line so that we do that stress test for you with what that impact tends to be. Any last questions? Giving us maybe a minute or 2 for any person who still typing something on the chart or on the Q&A. Just looking out to see whether we've left out anyone. We've been able to address all the questions asked. As I look out for that, I think just to remind us that, yes, we are getting in close period as we come to the end of this month and looking forward to engaging with us when we release our results. That's scheduled for the 11th of May. And thereafter, of course, we have lots of engagements as we do our road shows and interact more in a more detailed way with respect to our full year results. Again, as we have promised in the past, we shall be sharing a lot more on Ethiopia now that there over 6 months into operation, having launched in October, actually slightly earlier there on the 29th of August to the fast rollout, but we'll be sharing a lot more on Ethiopia to also help you model much, much better and get to have a full appreciation of the inroads that we have made in Ethiopia. And a testament of that, as I said earlier, to those that did not join at the very beginning, I'm actually speaking to you live from Ethiopia. So that tells you the connectivity is good, and I trust you've been hearing me very clearly. I see a question here from Danesh. Danesh is asking, and this can be our last question, can you share any big changes in shareholding over the past few months foreign bases local? So maybe, Danesh, I can address that. So yes, I think to what we had said earlier in terms of where we've seen a lot of activity, that there has been a lot of foreign sell-offs because of the macros, both from a country perspective but also with the interest rates that have hiked in the developed markets, the U.S. and the Europe markets. So yes, there is a definite change in terms of the holding from a foreign and local. As we do our analysis and come to the full year, we'll be able to share some numbers around that in terms of what is the foreign versus local shareholding of the free float shares so that you can have that appreciation. And I know there's some material that had been shared by the local media with respect to what is usually shared by our Capital Markets Authority around the same because it's an impact that has literally heat all the counters at the Nairobi Securities Exchange. So the numbers can be shared a little bit later, but it is true our foreign shareholding has come down because of those sell-offs to the benefit of the local shareholding of our free float shares. Okay. So let me take this last question from Faruk. This is that you, Dilip. What is the biggest positive-negative surprise regarding the Ethiopia business to date? We can use to close at that. I see Stanley is also smiling around it. But yes, maybe, Dilip, you can kick us off.

Positive and negative? Yes. I think positive, I would say, in terms of the mobile data, I think when we went to the market. We knew that this is going to be a market which is a bit different from our customers' adoption of mobile data faster than what we have seen in the market. I think some numbers are very, very encouraging we have seen. In terms of the customers who are coming in who are using mobile data, that ratio, please have a look at the Investors Day presentation, are very encouraging. I don't think -- I think that number is at a level where we are Safaricom probably after, I don't know, 10 years of mobile data launch. So that's very impressive. Second impressive thing is the way I think we do the customer registration through the biometric, which is very, very helpful as we launch. As you know, this -- the mobile financial services, as you launch, this will put us in a much better position in terms of some of the challenges that we are facing in Kenya that will not be facing there. So it is very, very helpful. And also for customers who lost their SIM, they come back. All that they need to do is their biometric verification, they get their SIM back. We are able to look at the customer profile because we serve customers in 6 languages. As you know, customer experience is one of the main area where you're trying to differentiate with the technology that we are bringing in. So that is also very, very helpful where languages are different. We know which they come from -- which province they come from, which areas they come from, and we're able to solve them better. I think that -- I would say -- I won't say negative, but are the challenges. I think challenge has been rarely in terms of the speed of rollout, first, of course, the delay in Ethiopia's finalization of the agreement. I think that probably took longer than what you and anticipated. Then the whole importation process, it's much more smoother, I think the run rate is -- we have come to a point we feel comfortable, but we learned a lot through the process. I don't know, Stanley, you want to add anything more, but I think these are the some of things that comes to my mind.

I think it's important also to highlight the positives, which is around the government support. So we've gotten quite a lot of support from the government. And every time we -- I mean they've been very open to us. Anytime we go to Ministry of Finance or any of the other regulatory bodies, we've gotten a lot of support. I think the part which might -- again, it's not really negative. It's a recognition of where the state of the countries is realizing that, in many cases, when you are rolling out in countries like, for example, Kenya, if you need people to do fiber, there will be 1,001 companies, which are able to support you. In Ethiopia, we've had to build that capability over time and bring that to the fore because there's only one incumbent who had in-housed all those things. So I think that those kind of learnings have been an interesting challenge that the team -- we have hard to overcome. But I believe that now we are in a very good place in terms of rollout.

Thank you, Stanley.

All right. Thank you so much, Dilip and Stanley. I think that brings us to the end of our questions this evening this morning or this afternoon. And before I request Dilip to give us a very brief closing remarks, let me just read something that has been shared here by Niam [ Passo ] so that you can speak to it as you give your closing remarks, Dilip. He says, "Thanks for the opportunity, Dilip." And we say you're most welcome. "As it relates to the business, Dilip, what keeps you awake at night," as you give you a closing remarks.

Thank you for that question. I think I sleep well. Let me just confirm that I sleep well because I think we have a very capable team who is managing things -- we do have challenges. I think we are not immune to the macro challenges, global challenges that we have. Yes, those are the challenges at the time. I think this is a company which has been over there for 23 years, and we are talking about the next 10-year strategy. So we are preparing for our next 10 years, next decades of growth and the story that Safaricom would tell after next decade. So if you ask me what keeps us awake, it's not necessarily what keeps us awake, but we have a strategy and then how we'll make sure that we execute in a way, whether it is for Ethiopia and whether it is for Kenya and some of the other subsidiaries that we have. I think that's the only thing I would say. Yes, there are regulatory challenges and other things. There is nothing different that -- nothing has changed dramatically than what you have seen before. So you all know what we are dealing with. And I think -- just as a closing remark, I want to thank everyone for coming on to the call. And it's always a pleasure talking to you. And the questions were very insightful for us. Also, sometimes it allows us to think through. And I hope you got the clarifications and answers that you are seeking for. But should there be anything that you still feel that you need to ask, as you know, our Investor Relations team is very friendly. You can always reach out to them, and they will be very happy to help you. And with that, I close the call and wish you all a very rest of the day or evening or night and look forward to talking to you very soon when we announce our full year results in May. Bye.

Thank you. Thank you, Dilip. Thank you all. Thank you for the engaging session. Have a good evening. Good day.