British firm Vodafone and the Treasury are set to pocket Sh22.8 billion in dividends from Safaricom after the telecommunications giant declared a Sh38.1 billion profit and offered to pay owners Sh0.76 for every share held.
At Sh38.1 billion, Safaricom’s net profit for the year ended March was 20 per cent higher than the Sh31.8 billion it reported last year, giving the management reason to increase the dividend payout by an equal margin from last year’s Sh0.64 per share.
“In light of the strong financial performance the board recommends a dividend of Sh0.76 per share — an increase of 18.9 per cent. We will pay out a dividend of Sh30.4 billion, which represents 80 per cent of our net income,” said the company’s chief executive, Bob Collymore.
Vodafone is the largest shareholder in Safaricom with a 40 per cent stake and is entitled to Sh12.1 billion in dividends, while the Kenyan government is poised to pocket Sh10.6 billion for its 35 per cent ownership.
The Sh38.1 billion profit is nearly double the Sh19.6 billion that KCB, the second-most profitable company in Kenya, reported for the same period, underlining Safaricom’s unrivalled position as a profit-making machine.
Safaricom’s total revenue increased by nearly 20 per cent to Sh195.7 billion, mainly driven by non-voice services such as M-Pesa and data, which at 49 per cent now constitute nearly half of the company revenues.
M-Pesa revenues grew by 27 per cent to Sh41.5 billion with an average of Sh14 billion transacted through the platform daily. M-Pesa users grew by 20 per cent to 16.6 million who transacted Sh5.3 trillion during the year. Safaricom paid out a total of Sh14.6 billion to its 100,744 M-Pesa agents.
The 25.1 million Safaricom users spent Sh90.8 billion calling each other up from Sh87.3 billion last year while short text messaging (SMS) yielded Sh17.3 billion in revenues compared to Sh15.6 billion a year earlier.
Safaricom said it had changed its customer recognition standard to include those who had contributed revenue in the last 90 days, down from the 220 days standard it has been using in the past.
“This removed 1.7 million inactive customers from reporting, in what was otherwise a record-breaking year for customer number additions,” said Standard Investment Bank.
The growth in SMS revenue of 10.6 per cent was registered amidst growing competition from WhatsApp messaging service.
Mr Collymore said Safaricom was looking at improving its data services to ensure it benefits from the increased usage of WhatsApp, which has a richer messaging mix including videos and images and is heavily encrypted to safeguard the privacy of users.
Credit: Business Daily