News Column

Safaricom Raises Dividend As Profit Hits Sh23 Billion

May 13, 2014

James Waithaka

Safaricom has proposed to raise its dividend per share to Sh0.47 from Sh0.31, after its profit after tax increased to Sh23.02 billion for the year ended March 31.

The behemoth telecom's after-tax profit ballooned by 31.2 per cent over last year's Sh17.54 billion, buoyed by revenue growth as the customer base widened in the period.

Safaricom attributed the fast-paced profitability to double digit growth in its revenue streams, with data and M-Pesa pushing up non-voice revenue to Sh52.1 billion - a 28 per cent increase.

"We have delivered a strong set of results today in all aspects of our business. There are more customers using our services and the average revenue per user increased across voice, SMS and M-Pesa," chief executive Bob Collymore said at a briefing yesterday.

Non-voice revenue chipped in 36 per cent of its total revenues, Collymore said, compared to 33 per cent in the previous year. Voice services contributed 60 per cent, down from 62 per cent previously. Four per cent of its revenues were generated from sale of devices, down from five per cent in the year ended March 31, 2013.

Voice revenue was however up 12 per cent to Sh86.3 billion, pushing Safaricom's total revenues to Sh144.67 billion or 16.4 per cent higher from last year's Sh124.29 billion.

"Voice is still the dominant source of revenue but non-voice streams are rising fast on continued diversification," said John Tombleson, the chief finance officer.

"M-Pesa represents half of all non-voice revenues," he said, adding that 34 per cent of all airtime top-ups in its network "were made via M-Pesa rather than cash".

The 51.6 per cent increase in dividend per share - an all-time high for the telco - means shareholders will take home Sh18.83 billion in total payout if they approve the proposal in the upcoming AGM. It will thus plough back Sh4.19 billion or 18.2 per cent of its net earnings into the business this financial year.

Retained earnings this year are thus lower than 2013's when it paid out Sh12.4 billion in dividends, retaining Sh5.14 billion. Safaricom said its free cash flow increased by 56 per cent to Sh22.7 billion.

Collymore said Safaricom's customer base increased to 21.6 million in the financial year under review compared to 19.4 million, a 11.3 per cent growth.

The number of M-Pesa agents increased by 15,478 to 81,025 agents in the year. Safaricom recruited 122,000 'Lipa na M-Pesa' merchants, of whom 24,137 are active.

"We hope to increase our active Lipan a M-Pesa merchants to over 100,000 this year," Collymore said.

Tombleson said Safaricom's retail pricing of its products remained unchanged in the period.

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Source: AllAfrica

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