Customers shop for various products at Safaricom Open Day in Nyeri in 2013. Old Mutual has bought 47.8 million Safaricom shares. FILE PHOTO | JOSEPH KANYI |
What you need to know:
Insurers are some of the largest institutional investors at the Nairobi Securities Exchange where they buy stocks to earn dividends and capital gains and meet obligations to policyholders.
Old Mutual is estimated to hold assets in excess of Sh10 billion, including its investments in quoted equities.
Safaricom is betting on data and financial services to boost its earnings going forward, with the firm spending billions of shillings in infrastructure upgrade and acquisitions.
Financial services firm Old Mutual has bought 47.8 million Safaricom shares worth Sh616 million, appearing for the first time on the telco’s list of top 10 owners.
The latest regulatory filings show that the firm, through Old Mutual Life Assurance Company, bought the shares in January which are equivalent to a 0.12 per cent stake of the telco.
Old Mutual now ranks as the tenth-largest local institutional shareholder of Safaricom.
British telco giant Vodafone is Safaricom’s biggest shareholder with a 40 per cent stake, while the Treasury (35 per cent) and National Social Security Fund (0.13 per cent) are the other major owners of the company.
Old Mutual Life Assurance is the only insurance firm to appear on the list of Safaricom’s top owners, with other underwriters either holding smaller stakes or yet to buy into the telco.
Insurers are some of the largest institutional investors at the Nairobi Securities Exchange where they buy stocks to earn dividends and capital gains and meet obligations to policyholders.
Old Mutual is estimated to hold assets in excess of Sh10 billion, including its investments in quoted equities.
Its purchase of Safaricom share is one of its largest investment in a publicly traded company, signalling confidence in the telco’s future prospects.
Safaricom’s net profit rose 31.4 per cent in the year ended March to Sh23 billion, helped by growth in non-voice business lines including SMS, mobile Internet and money transfer service M-Pesa.
This saw the telco declare a dividend of Sh0.47 per share, up from Sh0.31 for the previous financial year.
Safaricom is betting on data and financial services to boost its earnings going forward, with the firm spending billions of shillings in infrastructure upgrade and acquisitions. The company says it is ready to introduce the faster 4G network — subject to availability of spectrum — to further push uptake and consumption of data services.
It has also moved to acquire IT equipment and telecoms infrastructure of rival Essar Telecom, which is withdrawing from the local market.
The exit is expected to reduce competition in the telecoms market, benefiting the remaining operators, including Safaricom that controls more than 60 per cent market share.
Safaricom, however, faces the threat of new competition in its M-Pesa, from which it earned revenues of Sh26.5 billion in the year ended March.
The mobile money transfer and payment system has attracted new players including Equity Bank — the largest retail bank in the country — which is seen to pose the biggest threat yet to M-Pesa’s market share.
Old Mutual’s share purchase reflects the rising demand for the Safaricom stock among local institutional investors amid net sell-offs by other categories of investors.
Local companies raised their holding of Safaricom stock to 33 billion units in July, up from 32.5 billion units in November last year. They bought mostly from foreign companies that reduced their investment in the telco to five billion shares from 5.4 billion shares in the same period.
Local individual investors also cut their combined ownership to 1.9 billion shares from two billion shares, indicating profit-taking as the stock rallied to new highs.
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