Financial News
Date and time: 
Wed, 2013-05-15 19:57

Safaricom breaks record with Sh12b dividend payout

Telecoms operator Safaricom was Tuesday on the path to making history – again – after it declared a Sh12.4 billion dividend to its shareholders – the highest ever by an NSE-listed firm.

The payout, which awaits the approval of the board, is 41 per cent higher than last year’s 22 cents per share. If approved, shareholders will get 31 cents for every share held offering relief to the long-suffering investors.

The proposed dividend payout came as Safaricom once again broke its own money minting record with a Sh17.5 billion after- tax profit for the year ended March 31.

It was the first time that Safaricom’s profit grew after two consecutive years of decline. Safaricom’s return to profit growth was driven by steep increase in non-voice revenues showing that its heavy investment in data business is beginning to pay dividends.

Analysts have in recent weeks been forecasting higher profitability for Safaricom and a higher dividend payout for the year, causing the biggest rally in the company’s share price since it went public in 2008.

During Tuesday’s trading, Safaricom’s share price rose to an average of Sh7.10 or 20 cents higher than the previous day’s average of Sh6.90.

The share price peaked at Sh7.20 in Tuesday’s trading but was below the historic high of Sh8.15 recorded shortly after the company’s listing in 2008.

Safaricom’s ability to pay higher dividend is seen to be linked to higher cash flow that is not allocated to any capital expenditure in the coming year. Safaricom’s cash flow increased 55.2 per cent to Sh14.5 billion from Sh9.35 billion the previous year.

Non-voice revenues rose 29 per cent, helped by a tripling of the number of short messages sent during the year. Safaricom chief executive Bob Collymore attributed the growth in SMS to the Y-generation.

This growth positioned SMS as one of Safaricom’s key revenue drivers accounting for 30 per cent of total revenues or Sh10.13 billion in the year.

 

Expiry Date: 
Fri, 2013-05-17 19:57