Safaricom maintains dividend as Ethiopia unit drags profits
From left: Safaricom Telecommunications Ethiopia CEO Wim Vanhelleputte, Safaricom Chief Executive Peter Ndegwa and Chief Finance Officer Dilip Pal during the firm's 2023/2024 half-year financial results briefing on November 9, 2023, at Michael Joseph Centre.
Safaricom has maintained a Sh1.20 per share dividend amounting to Sh48.08 billion after net profit grew by 1.2 percent to Sh62.99 billion.
The telco announced Thursday that its board has recommended a final dividend of Sh0.65 per share amounting to Sh26.04 billion to add to the Sh0.55 per share interim dividend totalling Sh22.04 billion declared in February.
Safaricom net profit grew from Sh62.27 billion in the review period driven by increased revenue. This marked a reversal from the previous year when profits declined 10.6 percent.
The Sh48.08 billion dividend is the same as that of the previous financial year when the telco paid Sh0.58 per share interim dividend followed by a final payout of Sh0.62 per share.
Safaricom said the final dividend will be paid on or about August 31, 2024, to the shareholders on the register of members as at the close of business on July 31, 2024.
Net profit from Safaricom Kenya grew 13.7 percent to Sh84.74 billion while Safaricom Ethiopia posted a Sh42.09 billion net loss out of which Safaricom Plc’s share is Sh21.76 billion, given it holds about 51 percent stake in the Ethiopian business.
“We had an outstanding year in Kenya. We also outperformed group guidance, which was a revised guidance at the group level. We are also encouraged by our commercial progress in Ethiopia. Our Kenyan operation is now a one-billion-dollar business with operating profit hitting Sh140 billion,” said Peter Ndegwa, chief executive at Safaricom.
“Net income, excluding minority interest, recorded a 1.2 percent growth. We expect from financial year 2025, Ethiopia will start being a significant growth contributor for the top line and an accelerator for the bottom line,” he added.
Total revenue grew 12.4 percent to Sh349.45 billion mainly driven by M-Pesa and data business. M-Pesa revenue grew 19.5 percent to Sh140 billion while data revenue rose 25 percent to Sh67.4 percent.
Voice revenue retreated by 0.6 percent to Sh80.5 billion while messaging revenue went up 8.3 percent to Sh12.3 billion.
The review period saw direct costs rise 5.2 percent to Sh97 billion while other operating expenses rose 12.4 percent to 83.3 billion.
Safaricom chief finance officer Dilip Pal said Ethiopia operations are pointing to break even come 2025 and start contributing to the profitability.
“We believe the worst is behind us from the group financial point of view. When you look at the group numbers, you have to look at Kenya and Ethiopia separately because Ethiopia is in an investment phase and with such large greenfield investments in the last two years, it is expected to have losses at the start,” said Mr Pal.
