Safaricom has received regulatory approval to issue a Sh40 billion public bond for infrastructure upgrades in Kenya and Ethiopia, making it the largest corporate bond to be listed at the Nairobi Securities Exchange (NSE).
The firm will issue the first tranche once it has agreed on the pricing and tenure of the bond, with the finer details of the security yet to be approved by the Capital Market Authority (CMA).
Safaricom is seeking billions of shillings to broaden its 4G and 5G networks as it ramps up its data business to offset a decline in mobile calls, where it has seen a small revenue fall due to saturation.
Data is one of Safaricom’s fastest-growing revenue lines and it hopes that increased smartphone usage will boost the business further. In Ethiopia, the telecoms operator plans to boost its network expansion and ease cash flow for the subsidiary where it owns a 53.7 percent stake.
“Under the MTN [medium-term note] Programme, the company may issue various forms of notes, including green notes, social notes or sustainability notes,” the firm says in a regulatory notice that will be made public tomorrow.
“The issuance of tranche 1 is subject to the determination of the final commercial terms of the offer and approval by the CMA of the corresponding pricing supplement.”
The telecoms operator closed its half-year period ending September 2025 with a debt of Sh117 billion, including Sh61.2 billion in long-term borrowings and Sh55 billion in short-term borrowings.
Earlier, it tapped a Sh30 billion sustainability-linked loan or green bond from a consortium of local banks, including KCB, Absa Bank Kenya, Standard Chartered Bank Kenya and Stanbic Bank Kenya.
A green bond is a type of fixed-income instrument that is specifically earmarked to raise money for climate and environmental projects.
Safaricom’s debt and finance costs have increased recently, compounded by capital spending at its new business in Ethiopia.
It betted on the facility to accelerate its transition to becoming a technology company, reduce its carbon footprint, monitor its social impact and enhance its progress on gender diversity.
Safaricom will likely deploy proceeds from the bond to meet its growth targets for the financial year ending in March 2026, which include scaling 4G and 5G devices in Kenya and financing its commercial scaling activity in Ethiopia.
The telco’s capital expenditure for the period is estimated at between Sh72 billion and Sh78 billion where spending on Kenya is projected at between Sh54billion and Sh57 billion.
It targets spending between Sh18 billion and Sh21 billion for Ethiopia.
“In Kenya we remain focused on executing our strategy through segment-led execution and integrated solution and our consumer business will deepen partnerships to accelerate 4G+ device access and availability alongside scaling content solutions,” Safaricom Plc chief executive officer Peter Ndegwa said earlier this month.
“For our Ethiopia business, the priority is addressing operational and financial challenges and also meeting our regulatory obligations while maintaining commercial momentum.”
Safaricom’s first corporate bond is expected to revitalise a debt segment, which has been in a lull for years as Treasury bonds dominate.
Only Sh25.9 billion worth of corporate bonds were outstanding at the NSE at the end of September, including notes by EABL, Family Bank, the Kenya Mortgage Refinance Company (KMRC), Linzi Finco Trust and Batian Income Properties.
The corporate debt segment has been dented by issuers who went belly up soon after issuing their notes, including Imperial Bank. Micro-lender Real People, which has Sh1.63 billion in outstanding notes, also ran into financial headwinds soon after issuing its medium-term notes.
EABL has recently dipped back into the corporate debt segment, raising Sh16.7 billion to pay for other outstanding borrowings after making an early redemption of Sh11 billion notes last month.
The brewer’s bond was oversubscribed from its initial target of Sh11 billion, translating to a performance rate of 152.4 percent, with the paper being priced at 11.8 percent.
EABL is set to return to the market with a second tranche of the notes as it seeks to raise a total of Sh20 billion, indicating it would likely take Sh3.3 billion in the second issue.
Safaricom reported a 52.1 percent rise in its half-year profit to Sh42.7 billion, helped by a smaller loss in Ethiopia and M-Pesa’s double-digit growth.
Its net profit grew from Sh28.11 billion the previous year, and it expects to declare an interim dividend in February.
The Kenya business continued to be the main profit driver on the back of M-Pesa, the firm’s largest unit and on course to generate half of the telco’s revenues.
Its reported loss in Ethiopia dropped by 59 percent compared to the first half of the previous financial year, which was heavily impacted by a depreciation of the birr currency.
The loss in Ethiopia that is attributed to Safaricom dropped to Sh15.2 billion from Sh19.4 billion in the same period a year earlier, translating to a gain of Sh4.2 billion.
Safaricom launched in Ethiopia in 2022 as the Addis government opened up the tightly-controlled economy to foreign competition and is hoping its presence in Africa’s second most populous country will power future growth.
Its diversification from the saturated voice and SMS business is paying off, with M-Pesa, mobile data and fixed internet emerging as sales drivers.
Safaricom’s revenue rose to Sh199.9 billion in the six months to September, from Sh179.9 billion in the same period a year earlier, reflecting a 11.1 percent growth.
Revenue from mobile financial service M-Pesa rose to Sh88.1 billion from Sh77.2 billion previously, reflecting a growth of 14 percent.
