Hey crew, here’s to another week of cutting through the noise and focusing on what actually moves financial minds forward.

No buzzwords, just the stuff affecting wallets, business & the economy:

⚡️ BUZZ: The Quality Might Be Down But The Revenue Is Up

☄️ The Financial Cost Of Doomsday Preparation

💰 Wrong Numbers, Real Bill: Uncle Kebede Discovers Fintech Money

Here’s to the 118th edition

Let’s dive in.

A few weeks ago, some eagle eyed members of our community saw that the Ethio Tele stock, ticker $TELE, was going to the moon.

The humble ETB 300 price had skyrocketed to over ETB 1000!

This caused us to pull out a very warranted “sacré bleu! “

Make 👏 it 👏 make 👏 sense.

Because news like a record breaking revenue announcement are supposed to drive the stock up and yet, $TELE has remained relatively quiet.

It seems like the connection is still there but the signal might be weak.

Ethio Tele is a telecom company but don’t be fooled, its business empire spans more than the usual “Hello…is it me you’re looking for?”

It has expanded into things like server rentals, social media messaging, remittance facilitation, EV charging and financial services. 

Name anything that can make money, Tele is right there taking notes.

Kudos on the entrepreneurial spirit btw…A+ marks.

Maybe it’s a matter of time before we see ቴሌ እና ወንድማማሞቹ ኩንስፓኛ🥩?

telebirr has become a money making juggernaut, probably what increased its operating profit to ETB 92.9B, with margins as wide as the Strait of Hormuz.

If you’re using telebirr, then you are amongst the 60.6M that have adopted the phrase “ቴሌብር አለ?”

So, revenue is up, users are flocking in and Safaricom has not even been mentioned once in the chat.

But the stock market has still to get the message. The disconnect is mainly the lack of financial media.

Prices move on chatter and speculations.

In the markets, information is everything. What you do with it is absolutely up to you.

Well, does $TELE tickle your fancy? You might not like their LTE network or their questionable loyalty program but the business has built a strong moat.

A ‘moat’ is a sustainable competitive advantage that protects a company's market share and profitability from competitors.

Concerning its main business, Tele has only one competitor: Safaricom.

It’s struggling to increase market share.

Ethiopians are creatures of habit, they are difficult to convince to try something new.

Realistically, Tele might get one more competitor but that’s it. Be better than two companies and you top your league.

But understand that even if telecom is a sector that will never go out of style, it’s capital intensive, requires a large workforce to operate, growth is limited unless regulators bless a foreign market adventure.

And fundamentals need to be studied before opening Neway to invest (How do they make money? Performance over last few years? Earnings per share? etc.)

An intelligent investor looks at the business and where it’s headed instead of following price trends.

You are intelligent, so no need to remind you but look both ways before crossing the financial street.

$TELE is here to stay, ignore the noise and focus on signal.

While some people invest in stocks and wait for their dividends payout like it’s X-mas in July, others splash the cash on another type of investment, one that might not (or maybe it will) pay dividends.

Those people are not waiting for Santa but rather anticipate the day that the world collapses.

Yes, they are waiting for the end.

We are not experts at this ort of thing but the doomsday scenario can be played out in multiple ways:

And in the midst of all this, the President of America is talking about building a force field to protect ‘US interest’.

All of this dramatization is for your pleasure of course.

But doomsday prepping is becoming a big business, creating a market that we can’t ignore.

After the famous earthquake episodes in Addis 2 years back, people are also seeing what they can do to protect themselves from potential future catastrophes.

Our interest here is the financial aspect.

Awash Bank for instance is considering incorporating seismic movement absorbing technology in their new HQ building.

Others are also putting that What if This Happens expense line further up their list of priorities.

But prepping for a major, potentially apocalyptic, event is not cheap. And it puts into light a concept called opportunity cost.

This is the amount that is forgone from traditional investing such as real estate, stock market and conservative savings in favor of worst-case-scenario-if-the-world-ends spending.

The message: you shouldn’t quit your stable, well-paying job to become a survivalist.

Growing your own crop, signing long-term leases on basements or stocking canned food like its the 1960s would not be the best usage of your resources

That’s a financial and time sensitive opportunity cost.

For years, Ethiopia told fintech companies to innovate, digitize payments and help build the cashless economy.

Some of them, including ArifPay, SantimPay and others listened.

A costly misunderstanding, it turns out.

Earlier this year, we introduced our favorite character, Uncle Kebede from the Ministry of Revenues. Back then, Uncle ከቤ was collecting tax on profits businesses had not earned yet.

He has since expanded the product offering.

Now, he appears to be collecting tax on money businesses never earned at all.

Before Uncle calls his lawyer: everything below comes from this article in The Reporter.

Frank Digest is merely….providing emotional support.

According to The Reporter, auditors allegedly treated the total transaction value processed by payment gateways as company revenue.

In Arifpay’s case, the NBE initially recorded ETB 143.9 billion in transactions.

The actual figure was reportedly around ETB 32 billion.

A minor spreadsheet issue. Only ETB 111 billion. We have all misplaced a zero. Or three.

Investigators then allegedly calculated tax using the entire transaction value as earned income. Much like banks when you make a transfer, payment gateways only earn income with transaction fees, generally 2-3% of the transaction’s value.

Arifpay’s lawyers say the company’s actual obligation was between ETB 20 million and ETB 30 million.

The Ministry of Revenues reportedly collected ETB 818 million from Arifpay alone, apparently emptying ArifPay’s accounts.

ArifPay lived up to its name and became an አሪፍ pay day for Uncle ከቤ.

At least someone successfully monetised fintech.

The NBE later corrected the figures, having verified the lower numbers using data from INSA, Ethio telecom and CBE.

Crisis averted! Case closed…you’d think.

According to The Reporter, the Ministry of Revenues continued pursuing the original assessment anyway. 🤦

Uncle Kebede, emotionally attached with large numbers, does not let verified data interfere with a perfectly good tax bill.

Accounts were frozen, executives detained and funds withdrawn.

And they don’t do refunds.

Some of these companies had previously been recognized as model taxpayers only last year.

One year, a medal. The next, an empty account.