Safaricom share price hits record high after end of M-Pesa waiver

Safaricom Headquarters on Waiyaki Way, Nairobi. FILE PHOTO | NMG

By CONSTANT MUNDA
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Summary

• The stock touched an all-time high of Sh34.25 per unit earlier in Tuesday’s trading session before easing to Sh34.05 at the close.
• Analysts said the elevated interest on the counter is a continuation of a positive sentiment pre-Christmas after the removal of free M-Pesa transactions of up to Sh1,000.

Safaricom share price has hit an all-time high in post-Christmas trade, pushed by continued demand for its stock after the Central Bank of Kenya ended a waiver on M-Pesa fees for sending up to Sh1,000.

The stock touched an all-time high of Sh34.25 per unit earlier in Tuesday’s trading session before easing to Sh34.05 at the close, according to market data released by the Nairobi Securities Exchange (NSE), largely unchanged from Sh34.10 average price on Monday.

Analysts said the elevated interest on the counter is a continuation of a positive sentiment pre-Christmas after the removal of free M-Pesa transactions of up Sh1,000, which starts from Friday and telco announcement of expansion into Ethiopia.

“It’s more of positive sentiment carried over from pre-Christmas season following the CBK announcement and the positive vibe about Ethiopia,” said Gerald Muriuki, an equities research analyst at Genghis Capital.

“There has been an announcement about upcoming new products and generally growth prospects are looking up.”

The rise in Safaricom, which accounted for about 58.97 per cent of the market wealth, helped push up the NSE’s capitalisation above Sh2.31 trillion — levels last seen in March.

The latest price gain has pushed the telecoms operator’s market capitalisation, the measure of investor wealth in a company, to Sh1.36 trillion. The company’s share was trading at Sh5 a piece at the beginning of 2013, valuing the company at Sh200 billion at the time.

This means that Safaricom shareholders have gained than Sh1.16 trillion on their investment in the past seven years.

M-Pesa transfer for sending up to Sh1,000 had cost it Sh9 billion in the six months to June, with the firm reporting a six per cent drop in net profit to Sh33.07 billion — the first fall in nine years.

At Sh9 billion, the estimated revenue loss was equivalent to 25 per cent of the Sh35.88 billion Safaricom made from the M-Pesa platform in the six months to September and 7.2 per cent of total revenue in the same period.

The telco and its partners earlier in the month reached a $500 million (Sh54.5 billion) loan deal with US International Development Finance Corporation for expansion into Ethiopia, according to disclosures by the American sovereign wealth fund.

Safaricom sees Ethiopia, a market with more than 100 million people and relatively lower uptake of mobile and broadband services, as presenting significant growth opportunities. The firm’s sentiment has also been boosted by to launch insurance, unit trust and saving products.