Companies

Safaricom retains dividend payout as it enters Ethiopia

safaricom-pic

Safaricom PLC CEO Peter Ndegwa. PHOTO | JEFF ANGOTE | NMG

BDgeneric_logo

Summary

  • The telco will pay shareholders Sh55.6 billion in dividends up from Sh54.8 billion maintaining its dividend policy despite heavy investment in Ethiopia that weighed down on the telco’s profitability.
  • The first results, which include its Ethiopian operations, saw the Addis subsidiary post a Sh4.8 billion net loss that dragged down the group profits.
  • The telco’s net profit for the full year ended March 2022 is the second drop in a row after it posted a 6.8 percent profit drop last year, which was the first in nine years.

Safaricom has retained its dividend payout despite a 1.7 percent drop in net profits of Sh67.4 billion for the year ending March 2022 on Ethiopian entry.

The telco will pay shareholders Sh55.6 billion in dividends up from Sh54.8 billion maintaining its dividend policy despite heavy investment in Ethiopia that weighed down on the telco’s profitability.

The first results, which include its Ethiopian operations, saw the Addis subsidiary post a Sh4.8 billion net loss that dragged down the group profits.

Safaricom also saw tax payments jump 39.1 per cent to Sh34.7 billion on the resumption of corporate taxes whose waiver had lifted 2020 results.

The telco’s net profit for the full year ended March 2022 is the second drop in a row after it posted a 6.8 percent profit drop last year, which was the first in nine years.

“At the AGM to be held on 29 July 2022, a final dividend in respect of the year ended March 31, 2022, of Sh0.75 per ordinary Share amounting to a total of Sh30.04 billion is to be proposed for approval. This brings the total dividend for the year to Sh55.69 billion,” said Safaricom CEO Peter Ndegwa.

The Treasury will be one of the biggest beneficiaries of the dividend announcement and will get a gross payout of Sh19.4 billion for its 35 percent stake in Kenya’s most profitable firm.

Multinationals Vodacom Group Limited and Vodafone Group Plc will share a gross payout of Sh22.2 billion for their combined 40 percent interest in the Nairobi Securities Exchange-listed company.

The telco’s share price dipped 1.8 percent to Sh31.85 a share on the dismal performance even with the unchanged dividend payout. Safaricom took a hit on its Ethiopian unit even as the company’s traditional products outside M-Pesa, plateau and decline.

Ethiopian subsidiary where Safaricom expects to commercially launch this year consumed Sh5.1 billion in operational costs where the company says it has hired 300 staff, set up two data centres, negotiated tower-sharing deals with Ethio Telecom and carried out initial testing in preparation for a full launch.

The subsidiary, which did not record any revenues but posted a net loss of Sh4.8 billion, is expected to increase its staff to 1,000 in the next financial year.

The Kenyan unit, which posted a net profit of Sh72.3 billion, is also heavily reliant on M-Pesa — the biggest revenue contributor accounting for 38.3 percent of service revenue while voice contribution dropped to 29.6 per cent.

Safaricom now relies heavily on mobile money whose contribution has grown from 33.6 per cent in 2020 as voice and messaging decline.

Voice, which grew 0.8 percent to Sh83.2 billion now makes up 29.6 per cent of the company’s topline down from 34.5 three years ago.

Safaricom now wants to diversify its Kenyan operations and is seeking licenses for money market products, insurance and leverage on mergers and acquisitions to find new bright spots.

[email protected]