Safaricom CEO Bob Collymore (right) with chief financial officer John Tombleson at Safaricom headquarters in Nairobi May 10, 2012. The two have bought new shares in the telco in a demonstration of their confidence in the company they lead. Photo/FILE
What you need to know:
Safaricom has disclosed that Mr Collymore bought 320,000 shares in the year to March currently worth Sh2.3 million while CFO John Tombleson acquired 600,000 shares now valued at Sh4.3 million.
Local high net worth and foreign investors are increasingly looking at directors’ share dealing to gauge the outlook of the firms.
Analysts remain bullish about Safaricom’s prospects going forward, attributing their confidence to the firm’s dominant position and diversification of earnings to include data, M-Pesa and financial services.
Bob Collymore, Safaricom’s CEO, and the operator’s chief financial officer (CFO) have bought new shares in the telco in a demonstration of their confidence in the company they lead.
Safaricom has disclosed that Mr Collymore bought 320,000 shares in the year to March currently worth Sh2.3 million while CFO John Tombleson acquired 600,000 shares now valued at Sh4.3 million.
The chief executive owned 588,000 shares in the period to March 2012 while the head of finance made his first share purchase since joining the firm in November 2011 from Vodafone Qatar.
The share dealings come in a period when Safaricom share rose above the Sh5 initial public offering (IPO) price after flirting between Sh2 and Sh3 for a while.
Though the worth of the shares owned by the Safaricom executives’ pales in comparison with that of CEOs of Equity Bank, ARM Cement and Scangroup, analysts regard the insider buys as symbolic.
Local high net worth and foreign investors are increasingly looking at directors’ share dealing to gauge the outlook of the firms.
“Few people are better placed to evaluate a company’s prospects than those who actually run it, which is why many investors regard directors’ share dealings as a key indicator of future prospects,” said Kestrel Capital in an earlier interview.
On Tuesday, Mr Collymore noted that his share purchase was informed by Safaricom’s growth prospects.
“Both mine and John’s shares were purchased in our personal capacity on the open market,” said Mr Collymore, in response to questions from the Business Daily on whether the new shares were acquired through stock compensation or the Employee Share Option Scheme (ESOP).
“I can’t speak for John but my purchase was informed by continued strong performance of the company.”
Safaricom made a net profit of Sh17.5 billion in the year ended March, growing 38.8 per cent compared to Sh12.6 billion a year earlier as sales jumped 16.1 per cent to Sh124.2 billion. Its shares have surged 45 per cent this year to Sh7.25 each, outpacing the benchmark NSE-20 share index that has gained 16 per cent over the period.
Analysts remain bullish about Safaricom’s prospects going forward, attributing their confidence to the firm’s dominant position and diversification of earnings to include data, M-Pesa and financial services.
Mr Collymore, who joined the firm from South Africa’s Vodacom, steered Safaricom through a bruising price war initiated by Airtel Kenya in August 2010.
Profits have risen during his tenure, whose initial contract of three years was due to expire at the end of August.
The Treasury, which retains a 35 per cent stake in Safaricom, together with Vodafone (40 per cent), has earned billions of shillings in dividends and fees, helped by their large share volumes and their status as trading partners.
For retail investors, the company’s sterling performance has done little to cause excitement, with the majority earning dividends of less than Sh200 and whose cheques or M-Pesa credits can hardly be cashed economically.
Since the 2008 IPO, some investors have made millions while others, especially those who bought the share ahead of its debut at the Nairobi bourse, lost a fortune in the period stock traded below Sh5.
Wealthy investors including Chris Kirubi, John Kimani and Baloobhai Patel have been buying more of the Safaricom’s shares in the year to May, when stock hit a five-year high.
