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Kenya: Sh200 Billion Safaricom Valuation Defended
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Business Daily (Nairobi)
26 March 2008
Posted to the web 26 March 2008
Albert Muriuki And Jim Onyango
Morgan Stanley, the global financial services firm that partnered with Dyer & Blair Investment Bank to advise the Government on the Safaricom sale, yesterday defended its valuation of the mobile phone giant, saying it was done according to globally accepted standards.
The statement came a day after the Orange Democratic Party (ODM) threw a spanner in the works by calling for suspension of the sale of Safaricom shares in the primary market that is set to open tomorrow.
ODM secretary-general, Anyang' Nyong'o, raised concern over the valuation of the company that is Kenya's most profitable and questioned the method used in determining the share price.
Dr Nina Weiden, a vice-president at Morgan Stanley, said the valuation had been informed by the worth of other telecom companies such as MTN, Orascom and Mobinel that are operating in similar markets.
"Ours is a global firm with a reputation to maintain and there would be no reason for us to short value Safaricom," she said. She however declined to make the valuation report public terming it "confidential information only accessible to Treasury and the Privatization Commission."
Investment Secretary, Esther Koimet said the Sh200 billion valuation was a discounted price and that the actual value is in excess of Sh243 billion.
"The discounting was to ensure that as many Kenyans as possible buy the shares," she said as Finance minister Amos Kimunya maintained that the sale would proceed despite the outstanding issues. The minister said the Government urgently needed the money to finance its reconstruction programmes.
ODM had wanted the sale delayed until the Privatisation Commission takes charge of the process. It unsuccessfully sought the High Court's intervention last year to delay the initial public offer until the identities of the owners of Mobitelea Ventures are revealed.
Mobitelea Ventures, a British-registered firm, owns a five per cent stake in Safaricom. Its involvement in the firm came to light two years ago, when Vodafone Plc, which owns a 40 per cent stake in Safaricom released its annual results.
Mr Kimunya said the Government did not know the identities of the owners of Mobitelea since it is only a shareholder in Vodafone Kenya. "If Mobitelea was a direct shareholder in Safaricom, then I'd be concerned," said the minister.
Officials from the British white collar crime agency travelled to Nairobi earlier last year to meet members of a Kenyan parliamentary watchdog investigating the Safaricom ownership. Vodafone is reported to have sold part of its holding in Safaricom five years ago to Mobitelea Ventures.
Yesterday, Ms Koimet also introduced members of the Privatization Commission headed by Prof Peter Kimuyu. She said the commission had taken over the process and would work with Treasury under the transition powers vested in the Privatization Act.
The Privatization Act was signed into law on October 13, 2005, but only came into force in January 2, 2007 after an acrimonious court battle between ODM the Government.
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