Companies

Telco writes off Sh219m in under-performing unit

SCOM

A Safaricom customer care centre in Nairobi. FILE PHOTO | NMG

Safaricom #ticker:SCOM has written off Sh219 million or nearly 30 per cent of its investment in Internet service provider One Communications Limited.

The move comes after weaker-than-expected financial performance by the subsidiary, which it fully acquired between 2008 and 2013 at a total cost of Sh741.9 million.

“From the assessment carried out, the goodwill of Sh219 million has been impaired as at March 31, 2017,” the telco says in its latest annual report, adding that the subsidiary continues to operate. Safaricom has projected annual revenue growth rates of less than three per cent in the short term at the subsidiary which offers fixed and wireless data services to companies and individuals.

Besides its ongoing business, Safaricom also bought into One Communications to secure network licences held by the subsidiary.

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The telco first invested Sh185.3 million to acquire a 51 per cent stake in the unit before taking its ownership to 100 per cent in 2013 when it invested an extra Sh556.3 million.

One Communications, which relies on loans from Safaricom, in turn owns three subsidiaries: Comtec Training Management Service Limited, Comtec Integrations System Limited and Flexible Bandwidth Service Limited.