Nairobi, Kenya — Internet service provider AccessKenya Group has issued 10 million bonus shares to shareholders after gaining approval from the Capital Markets Authority.
The approval will enable the company to issue and list an additional 10,382,785 ordinary shares at Sh1 each in the ratio of one new ordinary share for every 20 ordinary shares held at the close of business on Wednesday.
Speaking at the group's Annual General Meeting (AGM), Managing Director Jonathon Somen said they decided against paying dividends to protect the company from going further into debt due to the high interest rates currently in the market.
"We wanted to make sure that there was some benefit going to our shareholders so we decided to give the bonus issue," he said.
"If we were to just pay it out as a straight dividend, it would have been in the region of Sh40 million which at the current interests rate would have cost the company Sh8 million," he explained.
Somen revealed that their first quarter performance has seen the company make considerable growth in terms of adding customers, growing their network and improving their systems.
"Business for the first six months of the year has been good and we've been adding net customers, expanded our fibre network to over 300 kilometres of fibre and we're about to break through 400 fibre buildings," he stated.
"We'll be around the 5,000 corporate customer figure today for corporate Internet services so we've grown from where we were from the end of last year," he added.
He announced that the group intends to spend between Sh250 million and Sh300 million on capital expenditure, with a significant portion of that going to their metropolitan fibre networks and network expansion.
This year, they have already added about 40 to 50 kilometres of fibre and about 50 to 60 buildings which are using Access Kenya internet connection.
"We have quite a bit of fibre being laid around Nairobi all the way through Mlolongo to Athi River and we're extending down Thika Road to Ruaraka and Babadogo," he said.
"We've now done connectivity through the middle of the industrial area down Nanyuki Road off Lungalunga Road and we're also extending down Lower Kabete Road," he added.
Somen and his family increased their stake in the company in the last quarter of 2011 by buying 8,932,100 shares through the Nairobi Securities Exchange, pushing their shareholding to 29.6 percent in December from 25.3 percent in October.
The purchase took place when AccessKenya's share price was trading at Sh4.95 and Sh5.60, opening the way for them to buy the stock at a bargain price, and Somen defended the purchase as a sign that the family is committed and passionate about the business.
"We believe in the business and in my personal view, the business is worth more than the share price that was in the market," he said.
"The share price was down because you were able to get very high interest rates in Treasury Bills and people were taking their money out of the stock market, but we're absolutely committed to this business and we believe it was a good time to go back into the market and buy some more shares," he explained.