Kenya’s listed mobile phone operator Safaricom has allocated a hefty Ksh75 billion ($750 million) bonus to its shareholders after growing net profit by 14.7 per cent to Ksh63.4 billion ($634 million) during a difficult period that saw net earnings for 15 listed firms drop by at least 25 per cent.
The bonus, whose disbursement is still subject to shareholder approval, comprises normal and special dividends of Ksh50.08 billion ($500.8 million) and Ksh24.84 billion ($248.4 million) respectively.
The biggest winners in the proposed payment plan are South Africa’s largest mobile phone operator Vodacom, which owns a 35 per cent stake in Safaricom, and the government of Kenya, which owns a similar stake.
British telecoms giant Vodafone owns 5 per cent of the shares while the remaining 25 per cent are held by individual and institutional investors.
Safaricom, which is listed on the Nairobi Securities Exchange, rode on increased revenues from its mobile money platform M-Pesa and data to grow revenues during the 12-month period to March 31.
Net earnings for the year ended March 31, 2018 stood at Ksh55.29 billion ($552.9 million).
“In a year where macro issues weighed on customer choice, we continued to generate positive momentum by focusing on the customer, investing in the quality of our service, performance of our network and creating differentiated customer experiences,” said Bob Collymore, the telco’s CEO.
Safaricom stock on the NSE on May 2 traded at a high of Ksh29.55 ($0.29) per share, compared with the listing price of Ksh5 ($0.05) per share in 2008, implying that the market value of the company has more than quadrupled in the past decade.
The telco’s total subscribers increased by eight per cent to 31.85 million from 29.57 million during the period under review, with the firm investing Ksh37.25 billion ($372.5 million) in network expansion and improvements in quality.
According to the audited financial results, Safaricom’s total revenues increased seven per cent to Ksh251 billion ($2.51 billion) from Ksh234 billion ($2.34 billion), with M-Pesa revenues contributing close to 75 per cent of the revenue growth.
M-Pesa revenues grew 19.2 per cent to Ksh74.99 billion ($749.9 million) from Ksh62.9 billion ($629 million) while Mobile data revenues went up 6.4 per cent to Ksh38.69 billion ($386.9 million) from ksh36.36 billion ($363.6 million).
On the other hand, voice revenues remained relatively flat growing at a slower rate of 0.3 per cent to Ksh95.94 billion ($959.4 million) from Ksh95.64 billion ($956.4 million) while SMS revenues dropped 1.3 per cent to Ksh17.5 billion ($175 million) from Ksh17.72 billion ($177.2 million).
M-Pesa and mobile data now accounts for 31.2 per cent and 16.1 per cent of Safaricom’s total revenues, further accelerating displacement of traditional voice and messaging services.
“Looking ahead, the business will sustain its momentum of investing in the quality of our service and diversification of our revenue portfolio to ensure sustained returns to shareholders,” said Collymore.
Last year about 15 listed firms issued profit warnings due to the difficult operating environment characterised by high inflation, declining credit to the private sector and erratic weather patterns that impacted on the performance agriculture-based firms.
These companies that issued profit warnings included National Bank of Kenya, Britam, HF Group, Kenya Power, Deacons East Africa (under administration), Kenya Power, Kenya Re-Insurance Corporation (Kenya-Re), Bamburi Cement, Sanlam Kenya, UAP Holdings, Sameer Africa, Crown paints, Kapchorua Tea, Williamson Tea and Carbacid Investments.
According to Kenya’s Economic Survey (2019) the country’s stock market performed poorly last year with the benchmark index, NSE 20-Share index, dropping by 23.7 per cent to 2,834 points in December 2018.
During the year (2018) the International Monetary Fund (IMF) increased Kenya’s risk of defaulting on its debt repayments to moderate from low citing the higher level of debt, together with rising reliance on non-concessional borrowing which have raised the country’s fiscal vulnerabilities.