KENYA: SCRAMBLE FOR SAFARICOM SHARES

Safaricom chief executive Bob Collymore speaks during the release of the firm's full year results in Nairobi on May 7, 2015 showing a 38 per cent rise in net income to Ksh32 billion ($336 million).

Safaricom Ltd, Kenya’s leading telecommunications operator by subscriber numbers, will attract more regional and international investors following impressive annual results and a foreseen rise in profits next year.

Riding on the voice, data and mobile money segments, it made a record Ksh31.9 billion ($336 million) after-tax profit for the year ended March, which translates into a 38 per cent increase, cementing its position as the most profitable company in East and Central Africa.

According to Bob Collymore, Safaricom’s chief executive officer, the telco expects to make Ksh32 billion ($337 million) to Ksh34 billion ($356 million) next year.

Analysts now say the scramble for a share of the lucrative company will attract new investors.

Johnson Nderi, a corporate finance and advisory manager at ABC, said: “The performance is solid and, given their innovativeness, more global investors will be willing to take up the shares.”

Increased appetite for Safaricom shares is expected to push the share price up to an all-time high, analysts say.

Growth trajectory

“I expect Safaricom to target a share price of Ksh20 ($0.2) as investors grab the shares,” said Aly Khan Satchu, an independent markets analyst. “It is the company to invest in for global investors who have locked onto the growth trajectory.”

Fred Ikana, director at Cent Savvy Investments, said the share price would pick as investors rush to buy shares ahead of the September closure of the dividend books, riding on the just-announced 2014 dividend of 64 Kenya cents per share, a 36 per cent rise from the previous year’s 47 cents, totalling to Ksh25 billion ($263 million).

“Last week, we saw significant demand for Safaricom shares although it did not reflect in the share price because investors had expected impressive results ahead of the announcement,” said Mr Ikana. “We see highs of Ksh20 ($0.2).

Safaricom shares closed the week at Ksh17 ($0.17). The best highs were at Ksh17.50 ($0.18) per share in March. Safaricom’s growth is six times the MTN Group’s 6 per cent; MTN’s biggest market, Nigeria, had a 12.1 per cent growth in after-tax profits.

MTN, Africa’s largest mobile operator, recently partnered with Vodafone to provide mobile money services in seven East African markets, among them Kenya under Safaricom.

READ: M-Pesa now spreads to seven African countries

Vodafone, the UK mobile company that owns 40 per cent of Safaricom, saw its dividends increase from Ksh7.52 billion ($76 million) to Ksh10.2 billion ($107 million) thanks to Safaricom’s impressive profits.

Safaricom has also partnered with Vodacom Tanzania in mobile money services with more partnerships expected through MTN and Vodafone.

Safaricom leads its East African banking and money transfer rivals in profitability. Equity Bank Group registered a KSh17.15 billion ($181 million) after-tax profit for the year ended December, a 27.8 per cent rise, as KCB Group recorded a 17 per cent increase to Ksh969.8 million ($10.2 million).

CRDB, Tanzania’s largest bank by assets, reported a net profit of Tsh95.6 billion ($51.5 million) in 2014 from Tsh84 billion ($45.2 million) in 2013.

The East African