MERGERS, ACQUISITIONS AND FINANCIAL RESULTS
SAFARICOM SETS NEW RECORD WITH SH17 BILLION IN PROFITS IN KENYA
Record profits at Kenya's leading mobile phone company will see Sh4 billion in dividends paid out to its shareholders, even as Sh18 billion is ploughed back into new investments. Safaricom has set new highs for company earnings, raking in Sh17.2 billion in profits before tax, an increase of 41 per cent over the last financial year.
An upbeat CEO Mr Michael Joseph immediately announced further capital investments of Sh18 billion for the coming year, putting the seven-year-old company's total capital investments at Sh65 billion since it was founded in October 2002.
The money will be spent in network capacity enhancement and expansion, with current coverage standing at 60 per cent of the population and 27 per cent of the total geographical area.
The company provided mobile services worth Sh47 billion in the 12 months to March 31 this year. At the same time, its active subscribers rose from 3.9 million to just over 6 million.
Their business has resulted in easy money for Treasury, which took in over Sh18 billion in tax alone. The Government, through Telkom Kenya, will also benefit from a 60 per cent share of the Sh4 billion in dividends recommended by the directors.
Telkom Kenya has in the past failed to share in the company's dividends, which have been offset against debts owed to Safaricom by the cash-strapped parastatal. This year, however, Joseph said that the State-owned firm has paid off all its debts owed to Safaricom and will be taking a significant share of its dividends. Mobitelea Ventures, with a 12.5 per cent stake in Vodafone Kenya (and therefore five per cent of Safaricom) can expect a Sh200 million cheque.
Chief Financial Officer Les Baillie announced that the company has a total long-term debts figure of Sh10.4 billion as at March 31, supported by total non current assets of Sh46.3 billion. The money is mainly owed to a group of local banks and its shareholders and represents an increase of Sh1.2 billion over the previous year.
The CEO predicted further growth in both profitability and subscriber numbers, with the latter hitting eight million over the next year. He also singled out the Saasa tariff and the M-Pesa money transfer service as key products to the company's future profitability. M-Pesa, Joseph said, has so far been used to send over Sh500 million in small amounts countrywide.
On Tuesday, Finance ministry permanent secretary, Joseph Kinyua, said the State expects to sell half its stake in mobile phone operator Safaricom by December and raise Sh40 billion. "The Government intends to sell 30 per cent to the public by the end of 2007. We expect to raise about Sh40 billion," he said. The operator is to be sold off via an initial public offering, which investors on the Nairobi Stock Exchange are eagerly anticipating.
The Government has previously indicated it would consider listing the company, rated Kenya's most profitable, on a bourse outside the East African country to attract more investment into Kenya. Safaricom's main competitor in the country of 35 million people is Celtel, a subsidiary of Kuwaiti-based operator MTC.
(SOURCE: East African Standard)