Safaricom owners set for big pay day after Sh32bn profit

Corporate News

From left: Rich Management CEO Aly-Khan Satchu, Safaricom CEO Bob Collymore and ScanGroup CEO Bharat Thakrar take a selfie during the release of Safaricom’s financial results May 7, 2015. PHOTO | SALATON NJAU |   NATION MEDIA GROUP

By OKUTTAH MARK, mokuttah@ke.nationmedia.com

In Summary

• Vodafone, the UK firm that is Safaricom’s single-largest shareholder with a 40 per cent stake, will take home Sh10.2 billion up from Sh7.52 billion the previous year and is also set to pocket billions of shillings as service fees for its proprietary rights in M-Pesa.
• The Treasury, with a 35 per cent stake, is the other top beneficiary that is tipped to earn a Sh8.9 billion dividend up from the Sh6.59 billion the previous year.
• That leaves other owners of the telecoms operator to share Sh6.4 billion up from Sh4.72 billion last year.

Telecoms operator Safaricom Thursday announced a generous dividend policy that promises its owners the highest payout jump since its listing on the Nairobi Stock Exchange (NSE).

Bob Collymore, the Safaricom chief executive, said directors of the telecoms giant had proposed to pay a dividend of 64 cents per share — a 36 per cent rise from the previous year’s 47 cents.

The Sh25.64 billion dividend payout came on the back of Mr Collymore’s announcement that Safaricom had posted a Sh31.9 billion profit for the year ended March 2015, a 38.4 per cent increase from the previous year’s.

Vodafone, the UK firm that is Safaricom’s single-largest shareholder with a 40 per cent stake, is among the top beneficiaries of the massive dividend payout.

The UK firm will take home Sh10.2 billion up from Sh7.52 billion the previous year and is also set to pocket billions of shillings as service fees for its proprietary rights in M-Pesa.

The Treasury, with a 35 per cent stake, is the other top beneficiary that is tipped to earn a Sh8.9 billion dividend up from the Sh6.59 billion the previous year, making its investment in the NSE-listed company one of the most successful in recent times.

That leaves other owners of the telecoms operator to share Sh6.4 billion up from Sh4.72 billion last year.

The dividend payout must get the board’s approval.

Standard Investment Bank analysts expect Safaricom to sustain the generous dividend policy in 2016 despite the additional expenditure it plans to make in the national security surveillance system. 

Thursday’s early morning announcement of the record profit, however, failed to move the Safaricom share at the NSE where it shed 40 cents to close trading at Sh17.15 from  Sh17.55 the previous day or a 2.28 per cent drop. 

Market watchers said investors had already factored the information in the past couple of months when traded volumes increased and the share price rose by 24 per cent to Sh17.55 on May 5 from Sh14.15 per cent on January 2.

Mr Collymore said Safaricom’s earnings before interest, tax, depreciation and amortisation (EBITDA) rose to Sh71.2 billion in the reported period, buoyed by a 13 per cent rise in revenue to Sh163.4 billion.

Revenue growth was driven by customer acquisition, cost savings and increase in customer spending on data, M-Pesa and SMS.

The Sh31.9 billion that Mr Collymore announced Thursday also cemented Safaricom’s position as Kenya’s most profitable company, having widened the profitability gap with its closest follower to Sh14.7 billion from Sh8.7 billion the previous year.

Equity Bank returned a Sh17.2 billion profit last year to become Kenya’s second-most profitable company closely followed by KCB with a Sh16.8 billion profit.