Safaricom owners get Sh38 billion dividend windfall
Safaricom chief executive Bob Collymore speaks during the release of the company’s full-year financial results at Safaricom House in Nairobi on May 10, 2017. Looking on is Safaricom’s chief financial officer, Sateesh Kamath. PHOTO | SALATON NJAU
Safaricom on Wednesday reported that it had posted a net profit of Sh48.4 billion in the year to March 2017 and that it would pay shareholders Sh0.97 for every share held — a 27.5 per cent increase from last year’s payout.
British telecoms firm Vodafone, with 40 per cent stake in Safaricom, is set to be the biggest winner with an estimated take-home of Sh15.52 billion.
Safaricom has been investing heavily in its data infrastructure and expanding its M-Pesa ecosystem to offset the decline in the traditional sources of revenue.
Telecoms operator Safaricom’s #ticker:SCOM super-profits have left shareholders with a Sh38.9 billion windfall, earning the company yet another distinction of paying out the largest dividend ever in Kenya’s corporate history.
Safaricom on Wednesday reported that it had posted a net profit of Sh48.4 billion in the year to March 2017 and that it would pay shareholders Sh0.97 for every share held — a 27.5 per cent increase from last year’s payout.
A significant chunk of the money, about Sh13.6 billion, is headed for government coffers for the 35 per cent stake it holds in the firm.
British telecoms firm Vodafone, with 40 per cent stake in Safaricom, is set to be the biggest winner with an estimated take-home of Sh15.52 billion.
The latest payout is an extra windfall for Safaricom owners who in September last year were paid a Sh0.68 special dividend. Safaricom’s net profit grew 27.1 per cent from last year’s Sh38.1 billion on the back of an 11.8 per cent increase in subscriber base to 28.1 million.
Safaricom’s sterling performance is seen to reflect the company’s continued investment in mobile money and data services that have become big growth drivers.
Safaricom chief executive Bob Collymore said sustained investments in the network was yielding benefits he expects to accrue in the medium term.
Subscriber spending on mobile money and data services grew at a significantly faster rate than legacy moneymakers such as voice and SMS, pointing to a positive growth outlook for the firm.
“We are not worried about the fall [in SMS revenue]. We expected this to come. We can see it in other markets where SMS has gone into the negative,” said Mr Collymore.
Safaricom’s mobile data revenue grew 38.5 per cent to Sh29.29 billion while M-Pesa revenue grew 32.7 per cent to Sh55.08 billion. Voice revenue marginally rose 2.9 per cent to Sh93.46 billion while SMS revenue fell 3.7 per cent.
Mr Collymore said Safaricom has been investing heavily in its data infrastructure and expanding its M-Pesa ecosystem to offset the decline in the traditional sources of revenue.
As part of ongoing efforts to expand M-Pesa usage, Safaricom on Wednesday launched a payment card that will be linked to customers’ M-Pesa accounts, moving it deeper into the financial services market.
The card makes it easier for Safaricom customers to pay for services and goods and is part of the telecom operator’s answer to a recent move by commercial banks to set up their own money transfer platform, PesaLink.
Safaricom has more recently come under stiff competition in key business segments besides surviving a series of regulatory storms that have shaken investor confidence in its ability to sustain the sterling performance.
Most recently, Safaricom faced a threat of action from the regulator following a network outage that persisted a whole day in April.
Mr Collymore attributed the network outage to a failed software upgrade that affected two routers into one of its major data centres.
“There was a flaw in the code of that software and that caused failure of the primary and redundant link. It was regrettable,” he said.
Safaricom is also at the centre of an ongoing mobile money interoperability as well as fair competition debates in the sector.
A report authored by a consultant for the Communications Authority of Kenya (CA) had earlier suggested introducing mobile money interoperability or the break-up of the company to hive off M-Pesa.
The telecoms firm Wednesday dismissed the proposals as hostile to innovation.
“For equitable growth in this sector, we feel that it’s equally important that our competitors are held up to the same standards so that our policy of sustained investment is not penalised... We also believe that recent calls to split M-Pesa from Safaricom are best described as being ill-advised,” said Mr Collymore.
The company has, however, signed up to government-led negotiations for mobile money interoperability.
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