Safaricom PLC (SCOM) Earnings Call Transcript & Summary

Good morning, good afternoon and good evening from wherever you are joining us from, and welcome to the Safaricom PLC Half year '24 Earnings Investor Call. My name is Caroline Wambugu, I serve as the Head of Investor Relations and Financial Planning Analysis here at Safaricom, and I'll be moderating today's discussions. On today's call, we will have a short update from our CEO, Peter Ndegwa, followed by some remarks on the finance performance overview by our CFO, Dilip Pal who will speak briefly about the results that we announced earlier today. [Operator Instructions] But before we kick off our session, allow me to speak through a few house rules. [Operator Instructions] Now it's my pleasure to welcome our senior, Peter Ndegwa, to share his introductory remarks. Peter, over to you.

Yes. Thank you, Caroline, and please confirm that you can hear me.

We can hear you, Peter you may proceed.

Good morning, good afternoon, good evening, everyone, and thank you for joining us for this briefing. I'll just make a few comments, and then I'll ask Dilip to go into a bit of the detail of the results that we announced earlier this morning, Kenyan time. So in summary, we are very pleased with the results that we have delivered for the half year that ended September 2023. We have had a strong performance in Kenya, very, very solid results out of the Kenyan business across the board in M-PESA in mobile data and in a number of other areas. And we also gone through quite a number of key milestones, commercial milestones in Ethiopia, including the switch on of the M-PESA platform. And we're already seeing some good results in terms of customer acquisitions. We are also pleased with the data usage. And of course, we'll go into a lot of the details of where we are in Ethiopia. But I just wanted to say we are pleased with the group results, primarily driven by very strong Kenyan performance, very good health of the overall business, particularly financial services, mobile data, and also fixed and some recovery that we have seen in Q2 on voice. We are conscious that we are operating in a tough macroeconomic environment, both at a macro level affecting customers in terms of wallet but also affecting our ability to control costs. In particular, you see that and we'll go through that, energy costs have been very, very significant in terms of inflation. But we are happy to say that we've been able to mitigate quite a lot of this through a lot of the work that we've been doing. So Dilip will set out the summary of the results and go through just in 5 minutes and then we'll spend most of the time on Q&A, which Caroline will facilitate. For the most part, the questions will be answered by myself and Dilip together with Wim who is our new CEO at Safaricom Ethiopia, but there may be questions that we may need to the extent necessary involve some of the ExCo members we've invited. So I hand over back to you, Dilip, to summarize the key financial metrics that we delivered.

Thank you, Peter. Thank you, Caroline. Good morning, good afternoon and good evening, wherever you are. Thank you for joining us today. We believe you may have joined our call this morning, and maybe you've already seen our presentation. So we will not waste time with updates, rather we'll spend time on Q&A. But just before that, I thought I'll give you a very quick summary of what we spoke about this morning. So I'll start with Kenya, macro environment continues to be tough in inflation still at an elevated level. Currency depreciation continued with a 22% decline year-over-year. GDP is coming back, but it's still not at the level it was before. You are aware of the FDA changes that has happened last year from August 2022 bringing it from KES 0.99 to KES 0.58. So in the current financial year, we have first 4 months of MTR at KES 0.58 compared to KES 0.99 last year. And we also have return to charging in reintroduction of return to charging from wallet to bank and bank to wallet which was introduced from January 2023. So as Peter said, very strong performance on Kenya site on the top line, service revenue grew 8.5%, MTR adjusted 9.3%. Within that, really stellar performance from M-PESA with a 16.5% year-over-year growth. You will see many of those KPIs that we have provided, but most importantly, one KPI that we are very proud of is the chargeable transactions per customer per month, which has grown from 22% to 29%. And you'd recall, this number was about 8% to 10% pre-COVID. We have actually tripled the chargeable transactions per customer per month in the last 3 years' time. All KPIs on M-PESA are tracking very well. On the lending side, it's Fuliza which has declined year-over-year, but that was understandable given that we have optimized fully the pricing last year. But outside of Fuliza, all lending revenue streams are growing nicely. On mobile data, again, very strong growth, 12.5% growth, as you have seen, driven by usage growth. We continue to grow the device, the 4G devices in our ecosystem, fixed, again, very good performance one-off adjusted from last year's booking. If we take that out, we have a growth of about 14%. Within that, Fibre to Home growth was 29%. Messaging, again, you have seen last year that we started growing on messaging, that trend continues. We reported 6% growth in messaging revenue. Voice declined 3% expectedly. As we always mentioned to you, voice is expected to decline in lower single digit. But within that, the quarter 1 was a bit tough. But quarter 2, I'm happy to report that we had a growth of 0.4%. Now coming to the cost side, the direct cost, we have seen a decline, majorly driven by the decline in handset cost but even otherwise, we have seen a very good efficiency driving our direct cost decline, especially reduction in M-PESA commission after introduction of or -- after reintroduction of us charging from M-PESA to Bank and Bank to M-PESA. On OpEx, Peter mentioned about our cost increase by about 8.7%, but majorly driven by energy cost. This is one of the biggest concern for us, which is majorly driven by the rate increase in energy cost, which has grown more than 50% year-over-year. Other than that, I think we are tracking quite well. We are able to mitigate the other increases to keep the overall operating cost growth below inflation. You may have seen a significant increase in interest cost. That's mainly driven by the interest rate increase due to the economic -- the macroeconomic situations, as you have noticed, the interest rates have gone up significantly. Our debt level has gone up a little bit, but it's not to the level. It's really -- it's not -- it's at a net debt level, it's just about KES 9 billion and we have also taken recently sustainability-linked loan, about KES 15 billion, which we have drawn in this period and we also have repaid the USD 120 million loan that we have taken for investing in Ethiopia. Net debt to EBITDA at 0.4%, very healthy. Cash flow, you may have seen very healthy growth in Kenya, both on operating free cash flow as well as free cash flow. And based on all of this and based the current momentum, we have decided to revise the guidance upwards by about KES 12 billion in EBITDA and also slightly higher in CapEx. In terms of Ethiopia, major milestones at the sites. We have now rolled out 2,057 sites and are on track to achieve our full year number. Customer growth coming up nicely. As you may have seen from our presentation, most of our numbers in the customer KPIs are doubling from the level that we had as of March end. Revenue growth, it's showing up now. We have about KES 2 billion service revenue which actually contributed 15% to incremental revenue growth in the overall group revenue, which is very encouraging. As you would know, this is one of our key expansion as we have gone beyond Kenya. And then top line growth will be supported in future. Mobile data is very, very encouraging. We are technically a data-led network. 69% of revenue actually came from mobile data. As Peter mentioned, we had the M-PESA switch on just about 1.5 months back, and we have already registered about 1.2 million customers. Funding side, very well funded. IFC came in, it came in as an equity partner of 7.5% share and also contributed for their equity contribution, the part of their equity contribution. And also, we are in a position to draw the $100 million debt that we have secured from IFC and full year guidance for Ethiopia remain unchanged and also medium-term outlook, which is a bit a breakeven in year 4 from the day of launch and also the CapEx outlook for first 5 years within the $1.5 to $2 billion. That remains completely unchanged. So at this stage, let me pause here and hand over back to you, Caroline, for the Q&A session. Thank you very much.

Thank you very much, Peter. Thank you very much, Dilip. And rightfully so, we have questions coming in quick and fast, so we shall delve right into it. And the first question, and this is to you, Dilip, is from Samuel Njihia of Renaissance Capital. So Samuel is asking, so mobile data grew by that 12.5% year-on-year for Kenya. However, the operating metrics goes to a slowdown. Customer ARPU grew by only 0.8% year-on-year and one month active customers grew by 3.5% year-on-year. But allow me to add here for the benefit of Samuel and everyone else on the call that the chargeable customers actually grew by 16.6% year-on-year. But the question from Samuel is how can we reconcile the lower operating metrics and the growth of 12.5%? And what really led to the growth in revenues? Is it the lower excise tax? If this is the case, weren't those cuts passed to clients? Why the slower decline in the rate by MB, the lower cuts should also have led to lower usage growth? Should we expect more aggressive cuts to drive usage or usage growth? Or are you comfortable with a slower pace in cuts? And it sounds like a bit loaded, but Dilip, I hope you got the question. Back to you.

Yes, thank you Caroline. And thank you Samuel for the question. Yes, I think if you're looking for a reconciliation, I'm sure Caroline and the team can help and support you. But just to give you a -- as Caroline mentioned, chargeable customers actually grew by 16%. And most importantly, the usage per customer per month, as you have seen, it has now passed 3.8 GB. So the growth is -- I mentioned in the call that the growth was primarily driven by usage growth coming from the adoption of more and more 4G devices, you have seen the growth in 4G devices in our ecosystem. We have seen the customers who are using more than 1 GB per customer per month is also growing. So it's mainly driven by the smartphone adoption -- more and more smartphone adoption, leading to a higher usage growth and tangible customers, as Caroline mentioned, actually grew by 16%. Caroline?

Yes, thank you for that Dilip.

Caroline, can I also add to that?

Yes, please.

Yes. I think the other element that neither -- there was a reference to rate reduction and so on and so forth and the element around excise. We did pass excise to customers -- excise reduction to customers. But if you recall, we have been reducing rate for a while for the past 3 years. And when you look at the cumulative effect, which we put into the results announcement this morning, it is about 65% in just over 3 years. And we had to do that for 2 reasons. One is to drive reduction in premium positioning of our business versus what is in the market, but also to get to a place where we believe that the rate was closer to drive affordability. When you look at the rates in Kenya, and you compare it to the region, we are now one of the lower rates in the region. Actually, we are in the potent quarter, I would say. Therefore, we do not see a need to significantly reduce rates anymore. Of course, we need to continue to increase adoption, but also usage and that's why the smartphone penetration is very important and also that what the customers do with when they have smartphones. So content has grown significantly as you have seen in the results and the usage will continue to be driven by that. And then the second thing is, with us launching locally assembled device, we will have devices at a lower price, and therefore, we do see the opportunity to accelerate the increase in adoption of 4G devices. But from a rate perspective, we see that bottoming out because we already have fairly lower rates, and we have -- we've done most of the correction in the past 3 to 4 years.

Thanks, Dilip and thanks, Peter for that addition. So I reach a set of questions here from [Madhi] of HSBC. So [Madhi] has 6 questions. And I'll just read as they appear as we assign the person to respond. So the question is what drove the lower EBITDA losses in Ethiopia half-on-half year-on-year? Are you going less aggressive on rollouts or marketing ETC? And so that's for you, Dilip. And second question, we see more handset sales that were the drivers. What were the drivers? Is your handset manufacturing? Has your handset manufacturing started? Did that not contribute to it yet? So I'll give that to you, Peter. Can you please give details on which transactions are still free on M-PESA? Is there a limit on how many times a day, a month or so the free transactions can be availed by users? And are there steps in place to stop abuse of this? That's to Dilip. And then the fourth question also to Dilip. How is charging for bank transfers again affecting user behaviors now that we've returned back to charging? Are they more transferring out to banks now or doing less transfer in or both are impacted? So that's just a question on the response from a behavior perspective with the return to charge. The fifth question, can you share which apps or services are now available on your super app? And what is the trend on your take rate there? That's to Dilip. And lastly to you Peter. The sixth question from Madhi. Can you please discuss current macro situation with a draw train situation? So Madhi of HSBC, 6 questions. Maybe Dilip you start us off, then Peter can take the other 2. So Dilip, over to you.

Yes. Thank you, Madhi. So I don't know which period you are comparing. Basically, it's not like-for-like Ethiopia comparison of EBITDA losses. What we said is that we would be rolling out over 2,000 base stations by -- over 3,000 base stations by full year, and then we have already rolled out 2,057 base stations. So we are pretty much on track in terms of what you intended to deliver by this financial year. So we are not slowing down in terms of our rollout. And of course, now the revenue is showing up. As you have seen, we have announced service revenue, reported about 1.9 for the first half, and that will contribute. But remember that we said FY '24 would still be the highest EBIT loss year for the Ethiopia and then it slides down and in FY '26, we break even. So you have asked quite a few other questions in terms of M-PESA free transaction. So majorly, the free transactions are the small value transactions, what you call, [indiscernible]. So it's for -- B2B transactions up 100 is free. And that is majorly contributing to the free transactions. And also in merchants up to 200 -- the merchants payment up to 200 is also free. We spoke about this, and we believe this is something very important in building loyalty and stickiness and also allowing customers -- the most marginal customers to use our services without being impacted significantly. Now the return to charging, reintroduction of charging. So what I mentioned in this morning's presentation was, in the last 3 years, our ecosystem in the bank -- the wallet to bank, that ecosystem has grown over 140%. And once we reintroduced, and as you know, we have repriced and almost over 50% reduction in the pricing, we have seen a decline of only 29%. So the -- it was expected that when you come to return to charging and there would always be customers making few choices. But that customer behavior, what we have -- this only signifies that the majority of the volumes still remain because customers still -- the [indiscernible] customers still find it very attractive. But also people who have moved out of -- also the customers who have moved out of the bank to wallet and wallet to bank freely, we see them moving to P2P, which basically means that they are also trying to optimize their pricing, whether it's more beneficial for them to do through P2P. So I think the bigger change is in the ecosystem, which has got developed and we saw substantial volume remaining within us. Your question on super apps. We have about 78 mini apps under super apps and we monitor their performance on a regular basis. So I think I did provide some statistics in terms of how do we see engagements. The customers who use super apps along with the mini apps, we see the number of transactions of a customer is over 90 compared to I mentioned about 29 transactions per customer per month in the overall NPS ecosystem, which means that customers are more engaged, they use more days of usage. And mini apps are integrated in a way that customers can use them as they still remain in the super app. So we are building the platform in a way that becomes a supermarket for customers to be able to do pretty much everything within that and also using our AI and machine learning algorithm to provide customers more offers and do cross-selling, up selling through that. From a revenue perspective, of course, because of more engagements and because of the payments being done through M-PESA, we see an upside. As you have seen from the results, 8% of M-PESA revenue came through super app and part of this, of course, driven by the mini apps as well as they end up paying by M-PESA. But more than that, we do have a revenue model wherein these numbers are still small wherein we get a small share of the volumes, which get transacted through the mini apps integrated in the super app. Yes, I think on the take rate, yes, we are not measuring the take rate yet on the super app per se, but I think you may have seen the take rate overall M-PESA take rate, which has improved from 0.31% to 0.36% in the first half of the year. Peter, to you, in case you want to add something on this or also for 2 of your questions.

Yes. No problem. Dilip, I think you've answered the questions well. Nothing to add to the questions that you answered. In terms of the 2 questions that Madhi asked, the first one is on handsets. Handset sales, yes, there was a significant reduction in handset sales and the main reason is, as you know, in the previous year, there was an increase in tax excise, the overall tax rate increased by, I think, 20 percentage points and that led to a higher price of handsets coming into the country. So therefore, we saw a reduction in the number of handsets we are able to sell because we only sell 4G+ devices. We also saw an increase in, what we call, parallel handset sales. So handsets that don't be taxed and get into the country. Of course, we cannot be able to verify those. But certainly, there was a lot more sales of handsets in the open market. That was clear from a price point perspective that they probably wanted to pay the full tax. So that's a pure reason why there was a reduction in number of handsets sold. That said, we've now opened the device assembly plant which was -- which came into operation at the beginning of October. And it is a joint venture between the MNOs in this country, but also Teleone who had been a major supplier of Hero device, Neon up to now. So they are now able to produce the equivalent devices that we've been selling that have been imported. And the price point is about 25% to 30%, depending on the device cheaper than the imported equivalent. So we believe that in addition to lower cost of devices and usually the financing on devices from January, then we should be able to see acceleration from quarter 4 of device sales as a -- result actually partly from quarter 2 depending on the stock that we have and certainly from quarter 4 or the device sales because they will be more affordable and actually, we have much more control over them. So that's on the question of devices. Your other question was on macroeconomic environment. When Dilip introduced, he did say that we are faced with the macroeconomic environment has been quite tough, both in Kenya, but also in Ethiopia. And there was one slide that we put there in terms of operating environment. So although GDP is kind of stable, is still mid-single digits, which has brought an inflation. Inflation has stabilized, but we know that there are certain areas of inflation that are very significant. Fuel is one of them, but also food prices. Luckily, from a country perspective, we've seen increase in agricultural output given the rains that came through. The worry is that the rains might affect harvesting. But certainly, there is better output this year from a food perspective. So the likelihood of a major food shortage is low. However, if we have excessive rains, that could affect ability of farmers to either harvest or dry, but also subsequently, we may have a drought spell that may come through. But at the moment, I think food -- focus on food availability is relatively good. I think the other elements on macro is the currency depreciation of 23%, which, of course, affects imported -- brings in imported inflation, but also affects our ability to deliver on the CapEx because a lot of our equipment is imported. But also imported inflation on some of our direct and indirect costs. So that's all I wanted to say with respect to Kenya. And on Ethiopia, on the security side, Tigre is now more stable, but Amhara is in a state of emergency. So clearly, we have to retreat our ability to roll out network and also recruit customers, but we keep adjusting our plans. And Dilip would have said that we are rightly on track in terms of delivery of the rollout. But you would have seen that it will affect our ability to recruit customers, especially because we've already built some network in Amhara, the state of emergency at the moment. But the biggest element from a macro perspective is pressure on customer wallet. And for us, because we are in a sector where we cannot price -- pass pricing costs in additional pricing, our objective has been to offer more value, to offer more personalized offering, but also to mitigate any cost increase on the P&L side that we don't have to be under pressure to part those in consumer pricing. So I'll leave it at that. Dilip, please feel free to add more.

No, thank you, Peter. You covered it well.

Okay. Peter. Thank you, Dilip. And maybe just staying on that conversation around the assembly plant. Follow-up question here from [ Biju Shah ] of Apollo Asset Management. So [ Biju ] we've answered the question around the rates and the taxes. But I'll address your second and third question, and this is what I'm posing to Peter. So do you expect to see higher revenue from the locally assembled phones compared to imported phones or is it a fact that there is a higher margin and selling imported device or locally assembled. And then the second part is with respect to what is the potential impact on employment that this manufacturing plant has in the area. And I must add that [Biju] started with a compliment. He says that he managed to use the device that we are assembling locally and he says it's quite a good phone. He must have that, yes. So he's quite a good phone. So that's a compliment. Thank you for that, [Biju]. And Peter?

Thank you, [Biju] and thank you for using the phone and testing it which is fantastic. And you'll be glad to know, [indiscernible] the way we've used the phone, one of the first customers is the Ministry of Health because they are rolling out community health program where they'll have 110,000 community health practitioners who would be attached to 10 million households. So the -- in terms of the forecasts or how we look at devices, our objective with local assembly is to hit price points that allow customers to afford those phones rather than start to make lots of money from our business of assembly phones. Yes. So our objective is to minimize the amount of money we make on devices and actually package those in value to customers. Of course, we won't be making losses but package devices, add financing and insurance and not propositions that allow customers to consume our GSM and also financial services product in a much easier way and in much more seamless way. But most important, pass on that 25% to 30% reduction in price, and therefore, increase the level of penetration of 4G devices as a result of that. So our expectation is not to make significant amounts of money on the actual device assembly, but really to benefit customers downstream and therefore, increase our ability to monetize that through our existing business. So Caroline, I think I lost your second question or I forgot.

Yes, yes. So the second question is with respect to potential impact on employment that this manufacturing plant has?

Yes. So at the moment, we have an initial plant that has been set up for a capacity of about 3 million devices per year. We believe on one shift, it's about 350 employees, and you could double that to about 600 to 700. Clearly, we believe we need much more than 3 million devices and to the extent necessary, we believe we can add more capacity. And then the second aspect is the device assembly can also be used to export into the region because we are in a commercial East African region. And we believe that, that is a very significant opportunity. And then finally, beyond producing 4G and imported devices, we can also start to assemble other devices, the CPEs that are used at home and a variety of other devices. So this could be quite versatile in the future, and we just need to lay out some of the needs that we have. And we believe that it will allow us to really be able to deal with a lot of the needs that our customers have.

Thank you, Peter, for that. I'll take a question here from -- so it's just dropped on my screen. Give me a minute. It was from Jaynesh. So Jaynesh of Mazi Asset Management, he congratulates us for the solid results. Thank you, Jaynesh. And the question is, could you comment on the competitive environment in Kenya? Is the competition being more rational on pricing? So that's to you, Peter. And then Dilip will take a question from Rohit Modi of Citi who is asking, please, could you share a funding plan for future CapEx in Ethiopia? Will there be more equity infusions? So we'll start with you, Peter on competition.

Yes. So it's a great question on competition. If we look at Kenya to begin with, on mobile data, we have seen the -- and I have said earlier that we have reduced pricing to a level where we believe we are about 10 percentage points above equivalent competitor [indiscernible] competitor. So we are very close to competition. We believe that the price points are very low -- are low enough, and we have not seen any appetite for the competition to go lower than where we are. On voice though, voice has always been a loss leader for a lot of our competitors, so they do have very low prices. And whilst we continue to reduce price on voice, our focus there is more affordability from our customers to make sure that we keep those at the right level. And of course, to follow where the MTRs are gravitating to. With respect to financial services, we reduced price in the past 2, 3 years by up to 60% for the most part on average. And we've seen that broaden the ability of the base to afford, including all those 3 transactions, which Dilip referred to. So from a rationality perspective, we see more rationality on the data side, probably less so on the voice side. And then from a financial services side, a lot of our competitors offer their financial services, especially transfer for free at least within their network. From an Ethiopia perspective, we have seen that the lead player has continued to reduce price. And our intention is not to undercut but basically to make sure that we are not significantly different from the lead player. But the lead player in Ethiopia, which is [indiscernible] will set the price points that the market will follow given their scale in the same way that we do here in Kenya. Dilip, please feel to add anything more, but I think that is -- that responds to the question that was asked.

Thanks, Peter. Yes. So Rohit, on your question on funding plan. So as I mentioned, we concluded the agreement with IFC for equity contribution with 7.25% shareholding and also $100 million debt. Our expectation is that the next level of funding, what the business will need will come from external sources and mostly from the borrowing from the foreign BFIs and we are in discussions. So to your question whether there would be more requirement of equity, the answer is the consulting members that are committed to make up any shortfall that comes in, but it's most likely that the rest of the funding would be made through the debt funding and also which will allow us to have the leverage of the debt to equity as per the requirement. So that's what -- so unlikely there will be more equity requirement, but should there be any shortfall that comes through, all the consulting members will fill it up. Thank you.

Thank you, Peter. Thank you, Dilip. So a question here to Dilip from Jake. Jake Ward is with Ashmore Group. The question is, can you please unpack the updated guidance for us as it appears that Kenya EBIT guidance implies a slowdown in H2? And then for Ethiopia, it implies a significant improvement in the EBIT loss in H2. Can we get some more detail on your assumptions here? Dilip, over to you.

So thank you. Thank you for the compliment and thank you for the question. Yes, I can see where you are coming from. From the first half of the year in Kenya, we have about KES 67 billion as EBIT. And at the high end, we are talking about KES 132 billion. So just like close to the double that of the first half. But remember, what we mentioned about the cost increase, especially on the energy side, we see the rate increased pretty much every alternate month. So diesel price goes up, the power rate goes up and that has an impact. So it's mostly coming from the increased cost level, increased cost driven by the energy cost. That's what is driving maybe slower than expectation of your EBIT guidance that you have given. But of course, this is still a significant uplift from the level that we were, a 10% uplift in the guidance that we have given for Kenya. Now to flip it for Ethiopia, what we said on Ethiopia is FY '24 is the peak losses. And within that, we still remain -- we still would like to remain within our guidance, which definitely implies that the second half of the year will be better than the first half. So this will be driven from the fact that by the time the trajectory of breakeven in FY '26, so you need to start reducing the losses. So that's part of that. And we are scaling up revenue, and we have just launched M-PESA and it's going to also add to the contribution in terms of the top line growth. So it's a combination of top line growth, customer acquisition, revenue growth and introduction of M-PESA, that will help us to achieve what we are trying to achieve. Thank you.

Thank you. Thank you, Dilip. Yes, Peter.

Just one minor addition to the Ethiopia composition. As we have also looked at the market economics of that market, we've also now started to look at the cost profile a lot more now that, that business is stabilizing and there are certain areas of cost that we will manage better. Not that we have not managed before, but we are set up in a slightly different way, like managed services the mix of expense versus local, that will start to move in the right direction and will help us be able to have a better cost profile as we go ahead in Ethiopia.

Thank you, Dilip, and thank you, Peter, for that addition. I move on to a question here from Francis. Francis of [indiscernible] Capital has a 2-part question, and I'll give the first question to you, Peter. And the second one to you, Dilip. So the first question to Peter. For Kenya, you have indicated that there will be continued price optimization for voice, what is the current premium level? And what is your ideal medium-term target? Question number 2 to you Dilip. Ethiopia's voice and data ARPU started flow that have shown strong improvement. Over the long term, what are the expected voice and data ARPU levels relative to Kenya? We can start with you, Peter.

Yes, Francis, that is a very difficult question. What the targeted price premium is going to be? I think -- I mean I remember telling the team that for data, we've gone to about 10%. I don't think voice will go that far. But certainly, I said that the way we look at voice, unlike data is that it is not necessarily the price premium that we have. It is whether -- how far we push so that we get good affordability because we are still growing minutes as a result of increasing or reducing the price that we have. And also because our current competitors use voice as the price leader, the price premium is not a rational measure that you used to be able to say, well, this is the target that we need. Of course, the reference point is also MTRs and how that gives us a bit more freedom compared to data. But certainly, in terms of reduction, we are not going to go in the same direction that we have on mobile data because most of the competitors actually use voice as a loss leader. But we have reduced the price premium, which was well above 150%, now it is roughly anywhere between 50% -- about 50% -- 50%, 60%. But also, the other element that we also use because of CVM depending on the segment of the customers that we are targeting, we can be able to give additional value, that means the premium is not as significant as you headline premium and actually, the affordability can be secured because we have some flexibility given where MTR is. But it's difficult to guide on the premium on voice because the rationality in the market is not as good as on the data side.

Okay. So on -- Francis, your question on ARPU. So the business that we have now and what you have reported up to September 2023, basically, 4 segments of revenue. Voice, mobile data, messaging and M-PESA. Now you would appreciate that M-PESA revenue is still not showing up because it's just the early days, and we haven't gone even up the line in terms of our promotion or enticements. So I will not talk about that. But if you look at the other 3 elements, the one which is tracking very well and from a Kenya comparison perspective, is mobile data. Just from a revenue contribution, Kenya is about 19%, mobile data contributes about 19% of service revenue. And in Ethiopia, we are a data network, and it's contributing 69% of service revenue. Now is this how it will continue to be like that? No, the proportion will come down because you'll also see that the voice minutes and messages uses are quite low compared to Kenya. It's not that people are not interested in using voice or message. It's just that our telecom operation, Greenfield Telecom operation as it expands, the network effect of a voice has not yet kicked in. So as the customers come in as more as scale up our business as we roll out more sites, the voice minutes will grow up. So without giving you a number, we could expect the voice ARPU to go up potentially messaging ARPU to go up. And mobile data, I think Peter mentioned about it in this morning's call, their usage in just 1 year, the exit usage for Kenya in just one year at the end of September, Southwest Kenya and Kenya's 10-year operation and you have launched mobile data. So which is very encouraging. And actually, the ARPU, as you have seen mobile data is 180. So pretty much all other it is a 30-day active ARPU, overall ARPU, voice ARPU, messaging ARPU, mobile data ARPU. So they are all doubling compared to the exit rate that we have. Directionally, what you'll also see M-PESA coming up and then adding to the ARPU levels in the future. But for that, you need to have more customers and more acquisition to be able to affect that network impact that I spoke about. So it's very difficult for me to give you a number and by when, but directionally, yes. We see good traction in mobile data to continue. Voice, we haven't yet seen the scale usage that we normally see once you have a skilled network. Back to you Caroline.

Thank you, Dilip. Thank you for that. Thank you, Peter as well. The next question, which I'll take from Jonty Fish, this is to you, Dilip. Jonty Fish is with Allan Gray. He says, you also mentioned that you revised your Ethiopia customer targets down from KES 10 million to KES 7 million. but you're still on track to meet your other targets. Is there a reason that your customer targets have changed, but your EBITDA breakeven hasn't? Dilip?

All right. I wish this question was for Peter, but anyway, I'll try and answer. Okay. I think, Peter, you mentioned about -- we have a momentum that we have seen that continues. So first of all, we acknowledge the site rollout and leading to the growth in customers, the acquisition that you have seen we have acquired more than 7 million customers already. But from a active customer base, what we have done and readjusted in terms of our outlook for the full year is basically based on the disturbances or the issues that we are facing in Amhara, which definitely allows us to rethink about in terms of, will you be able to get it almost like 20% of our base, but are we in a position to get the customer traction that we are getting. So as much as we are trying to make it up in other areas, but it's fair to say that there will be a shortfall coming, mostly coming from the region that our assumption is that this is not going to get resolved soon. So our current assumption is that it's still going to continue to the end of the year. Should there be an improvement in situation going forward. Of course, we are not going to stay at KES 7 billion, we're going to improve it even further. But at the same time, we are also seeing opportunities in more relative areas like Tigray region, which was disturb some point in time. So we are readjusting our rollout and also our customer acquisition strategy to ensure that we don't lose out the momentum. Yes, but we have to be practical in terms of revising our customer -- active customer forecast for the year. Now we have a certain target that we aim for. We are not compromising on our site rollout catalog, and we want to add the customers who are more quality, which means that we potentially will drive ARPU uplift. And also with M-PESA coming in, I mean, there is a likelihood of more loyalty and stickiness for those customers who are coming along with M-PESA usage. With that, we still believe that the EBITDA guidance for the year, which remains unchanged, is achievable. Thank you.

Okay. Thank you very much, Dilip. So a set of questions here from Tracy. So Tracy, you've got about 6 or so questions and 2 have been answered from previous conversations. So one of them on the handset costs and the future of that through the EDAC facility, so that has been addressed. The other one we show take it offline. You're asked you for a breakdown of revenues. So I acknowledge that particular piece and we shall address that for you. But the question to Dilip from Tracy of SBG is why are we seeing a decline in transaction volumes in payments and deposits? Do you anticipate a recovery. So that's the first question. Then let me think with the other 2. So the second one is what was the take rate increase in Lipa na M-PESA when tariffs increased. And probably, but lastly, why is data consumption in Kenya not growing as fast as Ethiopia. We see in pace of data price cuts compromise the level of usage growth in Kenya. So Dilip over to you.

All right. Caroline, can you repeat the second question? I didn't get that one.

Okay. The second question is why was there a take-rate increase in Lipa na M-PESA, while tariffs increased?

Okay. Excellent. Just let me -- 6 questions from you, it's not standard, but I'm happy that you already got answers for 2. So I'm only left with 4 to address. So on reason for decline in value and deposit, I think I articulated that very well. So this is coming from when we reintroduced charging for wallet to Bank and Bank to wallet, we have seen a decline in the volume by 29%. And remember, this is the lag which was free, and therefore, there was a significant increase in the way customers are using, instead of going to a bank they used to come to our agent point and then deposit money. So deposit -- this became a deposit channel for the customers. So we reduced prices but still the volume decrease. But I also mentioned that this decline in 29% was acceptable given that we have seen 140% growth in this segment over the years. So it's quite normal, and the decline that you have seen is driven by the Bank to wallet and wallet to Bank transactions. The Lipa na M-PESA, I think one of the upside that we have also got in is from the generating of pay bill, which basically means that we are not getting any revenue previously. Now with the return to charging coming in, we also have seen that showing up. So we haven't increased prices. It's just that the return to charging like also had something to do with merchants that allowed us to get higher revenue or better take rate. On data usage, I think you have us quite a few areas that you need to clarify so try and answer one by one. The fundamental to data growth is device because we have covered 100% -- pretty much 100% of the country. There is more and more content available. So there are these 3 ecosystem the triple play, which works on your access, which is done. The second is device, work in progress and have this content. I would say work in progress, there is still a lot to be done. So it is the device that needs to come in much faster than what you have seen, which will enable the growth that you are seeing. Plus if you go back and you see the year-over-year, the 4G attachment level. We are growing. We are growing nicely, but we are not growing as fast that we would have like to. So unless you have affordable 4G devices, affordable smartphone in the hands of the customer, the usage will not come in. So it's not because we still have drop in prices by 9.8%. Yes, it is the slowest growth, but it's still a drop, right? So no matter how much you do unless customers have devices in their hands. The ecosystem will not grow and we'll not see a growth coming in. And that's why you haven't seen probably 40%, 50% growth that we have seen in the previous years. Peter did mention about device sales in volume that has declined because of the increase in taxes last year. That's the reason why the local assembly of device is so important where you have the capacity to do a lot and at an affordable price, which can then, we now bundle with our products and make sure that customers can use it more. So that's -- we have a very high ambition in this space for future. So yes, there is a slowdown, but it's likely to get compensated in the coming months and years as the smartphone penetration goes faster. And so -- and I think I'm combining all your questions in terms, it's not because we have -- our rate of decrease in rates is lower, and that's what's contributing to that and our chargeable -- our customers are growing, chargeable transactions per customer are growing. 4G users are using more and more. We see very good update when they move from either from to 2G to 4G or 3G to 4G. But we have to fast check this. We need to do much more than what we are doing today and that will enable us to grow much faster on the usage side. And that is what will drive revenue and ARPU.

Thank you very much, Dilip for that. We have a question here from Baiju and Baiju, we acknowledge your question on the venture capital strategy and information to be provided on that. So we acknowledge we'll provide that information in next I would say presentation. So we'll take a mode of that. Samuel Njihia of Renaissance your 3-part question, I think we answered the first and the last, the one on voice and the elasticity of it and then cash deposits in terms of the decline there. So that has been addressed, but let's ask your question number 2 to Dilip. So Dilip the question from Samuel is on Fuliza. Given the targeted provisions on Fuliza, I expect the usage levels on the product to be much higher. Both in disbursements is close to way it was before the tariff revisions that is 32% year-on-year in half 1 versus 30% year-on-year in half 1 of '23. Was there a deliberate move by the partners to cut lending maybe to mitigate again it is an increase in NPLs or did the partners that NCB and KCB changed the credit limits. Dilip, over to you.

Yes. So on Fuliza, I think the whole objective of making credit affordable is what drove us to reduce a significant price optimization that we have done in last year. What you are expecting out of it, the first, of course, make it affordable, make every customers access to affordable credit. And the way I would like to see is that there are -- that if you want to expand the customer base, and then secondly, you want to see that loan disbursement group continues. So I think we have achieved all the key objectives. We met the objective on the affordability side. We met the objective on disbursement, which is growing nicely. Could we grow more? Yes, we could grow more, but also customers, which is also growing now. Could we grow more in terms of customers? I think the answer is yes. Our Fuliza customers' numbers will grow as we go along. So I think Fuliza, you have to see from that perspective, and the disbursements and as you grow your disbursements remember the, I mean, there are other products are also available in the market, which is also bringing in more options to the customers, including I'm not saying that, that has contributed to this, but the customers are also finding some of, for example, hustler fund, which is also -- has gained significant momentum during this period that we have disbursed significant -- I mean hustler fund has been a huge success. So you can't just see one part in isolation. You have to see all lending products in terms of money disbursed and how the ecosystem is growing. I think to our objective of making credit affordable, expand the base and make sure that customers are able to use it in the most convenient and affordable way to all the subjects have been achieved.

Thank you, Dilip. So I'll allow Dilip to sip a glass of water and direct questions to Peter. The next 2 sets of questions to you, Peter. There are questions from Eric Makaya asks our plans to expand to other markets beyond Ethiopia. That's the first one. And the second one, what's your assessment on the CapEx intensity in Ethiopia going forward. Over to you, Peter.

So thank you, Eric. 2 questions. So in terms of -- I'm very straightforward for answers, I should say, in terms of expanding to other markets. I think that the view we take internally, as you can see, there is still significant opportunity to grow in Kenya. So whether that's expanding fixed, expanding financial services going to the tech space supporting digital Kenya and so on. And you can see growth is showing up, but also really make sure we double down on making Ethiopia work because we've just made the investment, there's still a lot of heavy lifting to do. We need to double that network in the next couple of years to be able to ensure that we can accelerate recruitment of customers. They still have a lot of work, and we are glad that we -- with the very experienced CEO has joined us. And so we do want to focus on making Ethiopia work, but also expanding our participation in Kenya. So at this stage, we are not intending that we should focus on the new geography. Certainly, from an FX perspective, in international money transfer and e-commerce will continue to be a major area of play that for the moment, we want to make sure that Ethiopia works. You asked about CapEx intensity I think at steady state, it will probably be where Kenya is. But at the moment, it's just about -- we've signaled the amount of CapEx we want to invest for the next 5 years, which is $1.5 billion to $2 billion, then the number of sites we need to have achieved by that stage. We have a fairly good funding mechanism, especially from vendors but actually from a CapEx perspective, our intention is to accelerate the rollout network initially, but at steady state we should still get back to the levels we were F&A.

Thank you for that, Peter. Some questions here from Shruti of EFG. Thank you for your question, and thanks for the compliment on a strong set of numbers, which is evidence of our resilience and sustainable growth in Kenya. We appreciate that. So question to Dilip, when you look at this set of results, which aspects are you most proud of e.g, what has an identified -- what is an identified challenge that management proactively worked on to overcome. So let me repeat that. When we look at these set of results, which aspects are you most proud of. For example, what was an identified challenge that management proactively worked on to overcome. The second question, Shruti, I take note of it is to the IR team with respect to our Investor Day in Addis, in February. We'll share that information with you in the coming days. Over to you, Dilip.

All right, Shruti, as always, your questions are very different. So I think starting with what we are proud of, I think we're proud of the overall commercial execution. And the shape of P&L trajectory that we get to see for the first half of the year in Kenya. We are proud of the milestones, which are very important milestones that we are achieving in Ethiopia. So I don't want to point out one particular area. I think overall commercial execution is what we have, we're very proud of. And this doesn't come I know you just can't work in the last 3 months or 2 months or 1 month and then can produce these results. This has been a long, long sweat and whatever efforts as you can see. Some of the areas that you have seen, the content, for example, you can double your content revenue in one year unless you prepare for it. So the preparation for content which is not a big amount of revenue, but we believe that has worked. So in every aspect of the commercial execution, I think something that we are proud of. Now the identified challenge was true for us. One is the big, big item energy. And second one is the currency, yes. I think in -- especially energy for Kenya, from a rate perspective, not so much for Ethiopia perspective but more from the way the -- from the way of transmission. So the availability is there, but how do you make sure that site gets the grid power that needs. But I think the one a significant preparation that was recurred for us to be able to see how do we make our energy sustainable? Yes, we see a growth of 50%, but the actions that we have taken, which you have not taken, we would have seen probably a growth because of our solarization effort that we are putting in. And we're also preparing for the next phase of sustainable energy solution for us, which means that modernization of our energy infrastructure, solar sites and potentially other opportunities. On the ForEx side, I think it was not easy, given that we still have imported components in our CapEx and OpEx. But from our side, what we try to do minimize the foreign currency denominated loan, which, as you know, we have -- we had loan for Ethiopian investment. And we managed to repay those even within 1 year even before the full 5-year term completed. And there are several other initiatives that we have taken tried to make sure that we pay, we localize most of our procurement. We pay in local currency, matching the flow with that. I think there are several initiatives that we have taken that has actually helped us in mitigating probably a much bigger exposure for impacting the income statement in the balance sheet. The one which has been tricky was interest base is a hard element. Interest rates have been on an increase. You may have seen 30% increase in the average interest rate driven by the liquidity issues and other challenges, macroeconomic challenges that we have seen. Are we able to manage it? I think to a large extent, no, but you are still trying to see how we can rebalance I mentioned about sustainability linked loan, which goes with our Ethos, with our ESG agenda, with our ESG ambition. In any case, we are driving those targets. And this loan actually helps us to reduce interest cost because if we hit those targets, our interest rate will be lower. So I would say these are some of the areas. And of course, for Ethiopia, yes, you can't plan for some of the exigencies that we have seen, for example, the crisis that we have seen in Amhara, you can't plan for that. What you can plan is when such thing happens, what do you do about it? And which is what Peter and me spoke about that you really adjust your plan and make sure that you're being more opportunistic in the areas where you have not planned it before, but try and now make sure that you leverage and leverage your systems to get the maximum benefit out of it. So please have a very loaded question. And Peter, I don't know whether you want to add anything on top of that, other I have missed out anything from a management perspective.

Yes. Dilip, done very well. Probably just 2 elements that I would add, which has probably been much more multi. I know we spoke about it, but this is a very important one which is we identified that through our priced in this market or premium priced, and we've corrected price over time. And we could have be tempted to bank it in additional revenue or additional ARPU. But we actually felt that we needed to do that to create a more sustainable business. And then the other one, which is linked to what Dilip has said, in starting the productivity journey a lot earlier so that we can give ourselves a space, both to fund the pricing but also to anticipate that situations like we have had this year if we hadn't done a lot of the productivity elements business would be land to absorb the cost attrition that we saw and therefore, would have been forced to pass some of the -- some of these costs in pricing and affected revenue. So those would be the 2 that I would add to what Dilip has said.

Okay. Thank you very much, Dilip and Peter. And Peter a question here from Danesh Ranchhod from Franklin. Can you talk us through the FX liquidity access in Kenya?

Well, I thought that's a CFO question, but let me try. No, it's okay. It's okay. It's actually a very strategic question, and it's actually a very fair question. I think the thing is we know that in Kenya, there has been challenged from a liquidity perspective on currency. And many people probably on this call will now face those challenges from a dividend repatriation perspective, we used to see anywhere between 4 to 6-month backlog in terms of dividend repatriation or share, sale repatriation. And that has actually now been addressed. The new government identified it as an issue. Yes, that has taken that has also needed to have FX depreciated or at least the buckets to work. So we believe that the liquidity has improved on the basis that the market wants better at the moment. And actually, there's a lot more coherence in the way that regulators look after the markets and allow the banks to do their job. We play an important role because we flow in a lot of currency through our IMT business and that does support what happens in the market in terms of FX availability. But from a liquidity perspective, if we use the proxy that we are using this -- so in terms of whether investors going to be able to take money out. We believe we're in a much better place than we are about 12 months ago. Of course, I'll wait for your feedback. But that's the essence of where things are.

Thank you. Thank you, Peter, you did very well on that one. So a set of -- actually, this is just one question. So this is Lynette from Absa Bank, Kenya. The first question Lynette is on [ Tigray booster ] with that particular campaign with Ethiopia is still ongoing, at least I can confirm that it actually ended in August. But the second question, and this is to you, Dilip, data consumption in the metropolitan area has been very impressive. What is the data consumption gap between the metropolitan subscribers and rural area band subscribers. Dilip.

Thanks, Lynette. Thank you for that question. So I don't know whether you picked up the metropolitan sales. But it is -- I think, directionally, it's fair to say that metropolitan customers who have the latest prices the most technically more sound devices and also potentially more to use based on the just economic conditions, right? So it is fair to say that metropolitan users we have. So directionally, yes. But if you're asking me to compare exactly, we have to define what's the real areas within that, what are we already using. I think what we have noticed is the customers who are using 4G, they use a lot more data than the customers who are not using 2G, who are not using 4G. And in rural areas, the 2G base that we have now and we're still not upgraded to 3G or 4G device, they are mostly in rural area. So I don't have a number to compare between metropolitan and the rural, but it is fair to say that there will average consumption will be much lower than the metropolitan.

Thank you, Dilip. A question once again for you, Dilip, from Justina on hyperinflation. And the question is, what's the rationale behind reporting the hyperinflationary monetary gain in the income statement as opposed to other comprehensive income.

Yes. So what we are doing hyperinflationary accounting is just we are following the international accounting standard 29. So what goes into income statement what goes into other comprehensive income is very clearly defined. You have seen there is a separate item, which is also going into other comprehensive income. So what goes into other comprehensive income is very, very well defined so what you are doing is just complying to IAS 29 requirement and the numbers you're reporting is absolutely compliant to IAS 29.

Thank you for that, Dilip. Yes. So I think a question here from Baiju. But Baiju this question was answered earlier with respect to Ethiopia's data usage compared to Kenya so unless you have a follow-up question, happy to take that. So a question from Madhu of HSBC to you, Dilip, can you please remind us how much did Safaricom contribute to the government's budget in FY '23 or any recent period by way of dividends and taxes, has it fallen in absolute percentage times and should we expect more taxes or is in taxation in Kenya. I think the second one is more of an opinion, but the first one is our contribution in the national.

Yes, you're on chat, you are not in video or an audio. So I'm very tempted to ask questions to you, but I will do it for next time when we meet in person. So yes, we do track it very, very closely. And I think we provide a kind of a cumulative amount how much you have paid is also in our press release and booklet. Madhu, I think Caroline can guide you to that. But very specific to last year, yes, we -- Peter and me just recently went to receive our 18th edition of highest taxpayer award. So it's very, very, very fresh in our mind. So the way they do it, they provide their accounting year is slightly different in July to June. And based on that we, this is the 18th time that we have received it. And for an amount, if I -- broadly if I remember correctly, this amount that overall. So we have 2 roles to play. We do our own contribution by paying taxes on the income that we earn and then we are also withholding tax agent for the taxes that we recover for the government for the revenue authorities from our suppliers or other sources. From the last financial year, we have contributed about KES 130 billion, which roughly contributes to about 6% of the government revenue. Safaricom's alone contribution for the profit that we have earned, actual payout was KES 39 billion. And as we are turning into profitability, as you know, the growth in profitability so we are contributing more towards that. And I think this is also likely to grow more in the form of -- although the corporate tax rate remain unchanged. But as you know, the individual tax rates and some of the other tax series have gone up, which means that we'll be collecting more and that will also grow. So we are generating more profit, which means that we will pay more and also be collecting more because some of the action has gone up, including the salaried employee tax. Now directionally, yes, I mean the tax is a very -- what I would say, debated and sensitive area given that the government has to balance their books and the revenue collection has fallen behind target. So there are always ways the tax authorities should look at to get more taxes. And I cannot say that telecom, the big companies, the telecom companies has always been under that pressure. So nothing has changed, and you have seen some relief in the last financial year, but also some extra tax that has come in so watch out for that and there has really been what they call is median -- MTRS, medium-term revenue strategy, which the Kenya Revenue Authority has rolled out for more medium-term outlook to be able to see what are the sound areas that taxpayers like us can give us feedback and give them feedback from others as well. So it is where we are participating in enabling to see I mean the revenue authorities have to expand the tax base and not necessarily tax, people who are already paying taxes, the highest taxpayer some are like us, yes. We don't know where that will lead to, but we are definitely actively participating in providing our feedback on today.

Thank you, Dilip. And Madhu, just to complement what Dilip said earlier on the taxes. So you'll find that information on our press release for this in the Kenyan environment that will also be in the newspapers tomorrow, but the information is also on your website. But specific to the 6 months for this first half, we've remitted KES 69.14 billion in taxes, duties and license fees and this brings the total of what we have paid to the government since inception to KES 1.24 trillion. So I hope that gives you a good view of that. So of information available on our press release document. So a question here from Wesley Manambo. Wesley is with Standard Investment Bank. Could you give us a sense of your spectrum allocations in Kenya, mostly in the E-band and the 700 to 900 megahertz range, also as the regulated discontinued any allocations. So at this time, I'll give to you Dilip.

Yes. Okay. All right. So we don't have anything on 700 band, but we do have spectrum in 800 and 900 band. So we have 10 megahertz in 800 band, and we have 17.5% in 900 megahertz. So 700 band has not yet been allocated to us. And as you speak, I think we have sufficient spectrum for us to carry out our operations. We have sufficient spectrum in all categories, whether it's for using for our 2G voice, 3G voice or 4G data, 3G data and also the 5G and we have a very rich spectrum in 5G as well, both in 2,600 and 3,500, yes. And of course, in the future, we would be also looking for opportunities to acquire more spectrum, especially in the millimeter wave and 700 megahertz and when it comes in. But right now, we are quite comfortable with the spectrum allocation that we have.

Thank you, Dilip. Let me address this question to you, Peter. So this is a question from Sam Griffith. So what drove the year-on-year drop on M-PESA agents, the decrease in M-PESA agents. It declined marginally by 1.2%. But the question is keeping your agent base has reached saturation. The M-PESA agent base? Has it reached saturation. Peter?

Yes. I think it's a great question. But I think let's put that in context. So that before the start of COVID we had approximately 150,000 agents. So the agents number has doubled in 3 years. So you can see there has been a material increase in a number of agents, footprint of agents and so on and so forth. So therefore, a 1% drop is not material. It is on the kind of rounding, I would say, what we want to make sure, and we talk about 300,000 agents. It's about an agent for every 200 people. So it is actually a very good coverage. The things that we normally do or the channel to normally does led by Nick and his team is to find places where the accidents may not be good. So rather than maybe opportunities to increase the number of agents because there are areas where agents may be 2 minutes. So it is just to be balanced to make sure that we continue to ensure that we are close to our customers one task to be. And that will continue to be optimized over time. I think the second aspect is as people do more digital, more things digitally, do it themselves, you expect that physical distribution will complement digital self-start. So we do not have a target number for agents. What we normally do is respond to the need either of individuals who want to be agents or like to be places that don't have enough agents. But I would say we shouldn't read anything on the 1%.

Thank you, Peter. I see we are running out of time, but I'll take one last question from Danesh. And this is to your Dilip as we close. If you can talk through mobile data growth drivers via CVM and smartphone penetration. And the question from Danesh is also giving a comparative to other markets on the effective price by GB.

Thank you, Danesh. I know you have a very keen interest in the mobile data. I've never seen you not asking that question. I was hoping that will come through and finally, it came through. So on comparison, I don't have it in handy, but I can tell you with all the price optimizations that we have done, we are, I think Kenya would be one of those at a quite -- at a lower rate. It's more comparable rate than what the premium or the price that we had. So we are not at the higher level. We are anyhow at a lower level in terms of the other benchmark comparison. Now from a growth drivers, I think we -- Danesh we have a quite a bit of information in terms of the smartphone growth, which has now touched over 21 million then we spoke about within that 4G devices, which has also grown and now touched 14 million 4G devices, 14 million 4G devices. And they're within that now a small number but still 500,000 devices which are using 5G services, right? So our focus is on smartphone. Our focus is on 4G devices within that. And our focus is that also the one which is coming 5G network. Are they attached to our network, even whether you are selling those devices or open markets are selling the devices. So I think I was responding to some other questions where we said that the pace of growth in terms of the 4G and the other smartphone penetration has slowed down. It has not grown as much as we have grown in the past. That's purely driven by the affordability show on the price increase that we have seen. The price of smartphone has gone up by 60%, 70% because of the taxes. So we continue to look for opportunities where we can subsidize. We continue to look for opportunities where we have our early plan program proposition, which has crossed 1 million. And we also used the open market other the device financing partners. But the key is the price of device which has to go down. And that's why I spoke about and Peter spoke about the importance of the local device assembly, which enables us now to have more devices, affordable devices and more ranges and potentially other CT devices, which also consumes data. So it has been a bit of a slowdown in the first half, but we expect this to accelerate in the second half of the year as we are planning. In the beginning of the year, we had a very, very fair ambition to double our base of 4G devices from about $12 million to about $20 million. So we are not there yet. The second half, the task for the second half is huge to enable us to happen. These are -- our ambition as we mentioned -- as said, but with the device assembly coming into play. We believe we'll be able to make up some of the slowdown that you have seen in the first half. So is device, device and affordable device, which will actually play a significant role in enabling the growth. But otherwise, we are still seeing a nice growth in the usage. And you have seen also the price decline is probably one of the slowest. And we did mention about that, that we reduced premium, we don't expect a price drop to be as high as what we have seen in the past, and that's what is contributing to the growth of 12.5%.

Thank you. Thank you very much, Dilip. Let me invite back our CEO, Peter, to give his closing remarks as we bring this particular call to our close, Peter.

Yes. So thank you, Caroline, and thank you, Dilip for the engagement, and thank you, everyone, on the call wherever you are. I hope that you found the call useful. And we are happy to continue to have conversations over the next couple of weeks. As you digest the results. We are pleased with the results. We are pleased with the momentum in Kenya and some of the milestones in Ethiopia. There's still more to do, our enterprise on fit and also the move to tech in Kenya. And there's still a lot to be done in Ethiopia. The other element is we are looking forward to hosting everyone, we've able to make Ethiopia sometime controlled in February. We'll also be taking our Board at around the same time or sometime during Q3 for them to also see Ethiopia they have been there once or twice. But this is the first time they'll be going there after just to review how we are doing especially with the business having on M-PESA and so on. So thank you, and have a great evening and also happy for the IR team to reach out if you have any further questions. Thank you very much. Asante.

Thank you. Thank you, Peter. Thank you, Dilip. We shall endeavor to address the questions that remain unanswered. Otherwise from us, Asante. Have a good evening, good day wherever you are. Thank you. Thank you.

Thank you, Peter. Thank you, Caroline. Thanks everyone.

Thank you.