Safaricom tops Treasury’s list of dividend, surplus payers

Money Markets

Safaricom CEO Bob Collymore. File 

By OKUTTAH MARK

In Summary

• Central Bank of Kenya, which has long been a top surplus earner for Treasury, failed to pay anything this year.
• In absolute terms, Safaricom’s Sh18.8 billion payout is the largest ever paid by a firm publicly traded in Kenya.

The Communications Authority of Kenya (CA) has lost the title of the highest dividend-paying firm to the Treasury in a shift that has seen Safaricom come tops and Central Bank disappear from the rankings.

 

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• Safaricom tops Treasury's list of income earners

The telecoms regulator was pushed into second place by Safaricom, which paid the Treasury Sh6.4 billion this year. The CA earned the government Sh4 billion, down from Sh6 billion last year.

Central Bank of Kenya, which was recently the second top dividend earner for Treasury, failed to pay a dividend this year after it reported an operating deficit attributable to a drop in interest income.

The banking regulator paid the Treasury Sh2.1 billion last year and Sh3.1 billion in 2012. Kenya Ports Authority, KCB Group and KenGen are among top firms that offered a share of their profits to the government.

“The previous year, we handed over Sh6 billion to the National Treasury. There were no deductions as we were not compelled to pay tax,” said Francis Wangusi, the CA director- general.

The regulator earns its income from fees levied on telecommunication operators. These include Safaricom which paid Sh8.7 billion in the year to June 2013 as regulatory fees, up from Sh6.4 billion a year earlier.

Safaricom’s super profits changed the face of government’s top dividend-paying firms. The telecoms operator announced a record Sh18.8 billion pay-out to shareholders after a 31.4 per cent jump in net profit for the year ended March.

READ: Safaricom raises dividend payout to Sh19 billion

The Treasury got a Sh6.5 billion dividend cheque for its 35 per cent stake, making the telecoms operator one of the most successful public investments in recent times. It paid the government Sh4.3 billion last year, placing it second behind CA at Sh6.2 billion.

The massive dividend pay-out is also good news for retail investors who have been earning only a few hundred shillings for their small holdings since Safaricom was listed in 2008. At Sh0.47 per share, the pay-out is 51 per cent higher than the previous year’s Sh0.31.

In absolute terms, Safaricom’s Sh18.8 billion is the largest dividend ever to be paid by a publicly traded firm in NSE’s history.

Besides the strong earnings, investors in the telecoms operator also stand to benefit from a possible continuation of the share price rally at the Nairobi bourse. The Treasury has been looking up to regulatory agents and other State corporations to finance it in a bid to bridge a budget gap.

In 2012, it earned Sh21.2 billion from dividends and surpluses remitted by firms where the government has stakes with KCB, Safaricom, CA, KPA, KenGen and CBK accounting for 64 per cent of the cash.

CBK dropped from the rankings this year after its operating income dropped to Sh7.4 billion from Sh14.2 billion, resulting in the regulator sliding into a deficit position despite cost-cutting measures which saw its expenses shrink by close to Sh3 billion to Sh9.3 billion.

KCB for the first time joined the club of firms that pays Treasury dividends in excess of Sh1 billion, forking out Sh1.04 billion for its 17.55 per cent stake, up from Sh994 million last year. KenGen handed Treasury a Sh923 million dividend cheque, unchanged from last year.