Mergers, Acquisitions and Financial Results

Mobile phone service provider Safaricom has announced a Sh70 per cent increase in profits for the year ended 31st March 2004. According to its audited results, the company registered a Sh3.4 billion after tax profits compared to the previous year's earnings of Sh2 billion. Turnover rose 32 per cent from Sh14.3 billion to Sh18.9 billion, while operating costs declined to Sh0.8 billion from Sh1 billion.

Michael Joseph, the company's chief executive officer attributed the strong performance to a significant growth in customer service and prudent management of its finances. "We have a loyal subscribers that continue to spend on average a reasonable amount of money on airtime," Joseph told The East African Standard in a telephone interview. "In addition we are a very tightly controlled and managed company."

The year experienced a significant increase in the number of subscribers, with the base growing by 664,073 to 1,528,672, reflecting a 77 per cent increase. And analysts predict a greater increase in the subscription base following the company's announcement that it will reduce its tariffs this month (July 2004).

Joseph said the move had been necessitated by what he described as a "friendly" budget presented by the Finance Minister, David Mwiraria. To cope with the increased subscription level, Joseph said, the company continued to invest heavily in the expansion of its network infrastructure. Capital expenditure during the same period rose significantly with a further investment of Sh7 billion, bringing total capital expenditure to Sh25.6 billion. Joseph said the company had continued to reinvest all internally generated cash to finance the expansion. Total borrowing in the year reduced by Sh1.024 billion to Sh11.95 billion.

The East African Standard