Walter Wafula
9 November 2009
Kampala — Rewards for Ugandan investors who bought shares in Safaricom -Kenya's largest mobile phone communication operator are expected to start flowing in this week.
The company's board of directors recommended a total dividend payout of Shs102 billion (Kshs4 billion) in June, following the release of the company's full year results in March.
For individual shareholders who numbered 830,000 at the time, the aggregate dividend payout translates into Shs2.55 per share implying that for every 100 shares one owns, the reward is Shs255. While it is about half of Stanbic Bank Uganda's Shs5.2 per share mid-year dividends pay, it represents a twofold increase from the previous year's dividend pay-out.
Ugandans invested in Safaricom during its initial public offering in which the Kenyan government sold its 25 per cent stake in the company. According to Grace Semakula an equity trader and analyst at stock brokerage firm African Alliance in Kampala, Safaricom will pay Ugandan shareholders by cheque, the same way other Nairobi cross-listed companies like Kenya Airways, East African Breweries Limited and Jubilee Holdings Limited, pay their local shareholders.
To save the company about Shs997 million, in Kenya, Safaricom opted to use its landmark M-Pesa mobile money service, to pay out dividends to shareholders whose compensation is below Shs892,500 (Kshs35,000).
Safaricom declared the dividend payment after earning a profit before tax of Shs390 billion earned in the 12 months endeing March this year, which however, dropped from about Shs510 billion earned the previous year due to a difficult year characterised by an increase in local competition, the global financial crisis and the country's post-election violence experience at the beginning of last year.
The firm's Chief Executive Officer Michael Joseph, however, attributed the fall mostly to financing costs during the year, according to a Reuters report.
Last week, Safaricom declared half year revenue of Shs1 trillion a sign that the company could double the income by next March. Despite the strong performance, the company's share price has been oscillating between Kshs3 and 4, below its initial public offering price of Kshs5.
Mr Joseph attributed the condition to heavy demand from foreign investors who continue to invest their money in emerging markets like Kenya and Uganda, following the ease of the financial crisis and near recession end in most developed countries.
In an interview with Daily Monitor last week, Mr Kenneth Kitariko, the General Manager, African Alliance said local investors should give Safaricom the benefit of doubt because the company has one of the strongest balance sheet regionally.
"Safaricom will come back as a strong company no doubt whatsoever," he said raising hopes of Ugandans investors who were allotted fewer shares than they anticipated and lost billions of money while converting their Kenya shillings Safaricom cash refunds into Uganda shillings, last year.
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