Safaricom PLC CEO Peter Ndegwa. FILE PHOTO | DIANA NGILA | NMGSafaricom PLC CEO Peter Ndegwa. FILE PHOTO | DIANA NGILA | NMG
By CONSTANT MUNDASafaricom has trimmed its interim dividend by Sh2.4 billion on the back of reduced earnings in the half-year period, marking the first cut since it started distributing profit to shareholders before the end of a financial year.
The giant telco’s board has approved a payout of Sh0.58 per ordinary share, or an equivalent of Sh23.24 billion, for shareholders on record by March 15.
The total interim dividend, which is lower than the Sh25.64 billion paid last year, will be wired on or about March 31, the firm announced on Monday following a board meeting last Friday.
“The board of Safaricom PLC is pleased to announce that at a meeting that was held on 24th February 2023, it was resolved to approve the payment of an interim dividend of Sh0.58 per ordinary share held amounting to Sh23.42 billion, for the year ending 31st March 2023,” Safaricom said in a note to shareholders.
The 6.0 percent drop in interim profit distribution to the shareholders follows a 10 percent fall in net profit for the six months that ended last September to Sh33.5 billion.
The firm’s profitability for the period was slowed down by a cut on the rate mobile phone operators charge each other for interconnecting customers at a time it was spending heavily on entry into Ethiopia.
Industry regulator Communications Authority of Kenya (CA) late December 2021 cut the interconnection charges, commonly referred to as mobile termination rate (MTR), from Sh0.99 to Sh0.12 to match shifts in technology which have made mobile telephony more efficient.
Read: Safaricom interim dividend drops 9pc to Sh23.4 billion
Safaricom CEO Peter Ndegwa in November further blamed the reduced half-year profitability on a “slowdown in business operations due to the elections period, increase in excise duty on SIM cards and mobile phones and a failed rain season leading to more economic hardship for the country”.
The Treasury will be one of the biggest beneficiaries of the dividend windfall for its 35 percent stake in the region’s most profitable firm.
The Treasury is set to be paid a gross of Sh8.13 billion for its 14.02 billion shares in the firm, a drop from Sh8.97 billion a year ago.
Multinationals Vodacom Group Limited and Vodafone Group Plc will, on the other hand, share a gross payout of Sh9.28 billion for their combined 40 percent interest in the company publicly traded on Nairobi Securities Exchange. This is a reduction from Sh10.24 billion previously.
Safaricom is expected to announce a final dividend when it releases its results for the year ending March later this year.
The telco has a policy of paying out at least 80 percent of net income as dividends. Safaricom has shed 9.8 percent of its share value since announcing the reduced half-year profit last November.
It traded at an average of Sh23 per share on the Nairobi bourse on Monday compared with Sh25.50 per unit on November 11.
The announcement came on the day President William Ruto’s administration further sought to assert its influence on the company’s board.
The administration has appointed Karen Kandie as the alternate director to the Treasury Cabinet Secretary Njuguna Ndung’u, replacing Stanley Kamau.
The change came about a month after lawyer Adil Khawaja was picked as the board chairman, taking over from John Ngumi who was perceived to be an ally of former President Uhuru Kenyatta.
Read: Safaricom replaces Bitange Ndemo in new board changes
Ory Okolloh, a Kenyan activist and lawyer, has replaced Bitange Ndemo -- Kenya’s envoy to the European Union -- as an independent director.
The telco has also tapped former KCB Corporate Banking director Esther Masese as chief financial services officer from February 21, while Zizwe Awuor Vundla was appointed Director of Brand and Marketing from her previous position as head of marketing for Diageo South Africa.
→ cmunda@ke.nationmedia.com
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