4 November 2017

Kenya: Safaricom Six-Month Profit Rises to U.S.$249 Million

Safaricom has announced a 9.5 per cent increase in net profit to $249.4 million for the six months ended September this year, barely a week after its affiliated firm Vodacom Tanzania sold its $58.5 million stake in Helios Towers Africa, to narrowly avoid posting a loss in the third quarter of this year.

Safaricom chief financial officer Sateesh Kamath, sitting in for the firm's chief executive Bob Collymore who has taken sick leave, said the six-month rise in profit was backed by the strong performance of its mobile money unit M-Pesa and its data business.

Mobile money revenues grew 16.2 per cent to $284.87 million, while data income rose to $166.37 million, from $127.03 million.

"Our mobile money platform M-Pesa and the mobile data are becoming the engines of growth, but our voice revenue is still the main cash stream. It rose to $448.8 million from $433.23 million," said Mr Kamath.

Safaricom, which is 35 per cent owned by Vodacom and five per cent owned by Vodafone, also saw its earnings before interest, tax, depreciation and amortisation (EBITDA) rise 6.8 per cent to $523.84 million, compared with $481.67 million over the same period in 2016.

"Our earnings before interest and tax rose 20.6 per cent to $355.49 million. We have kept our EBIT guidance for the full year to end-March unchanged at between $673 million and $710.9 million," said Mr Kamath.

On Monday, the firm announced that Mr Collymore would be taking medical leave for an unspecified period. Mr Collymore has been in charge of the firm for the past seven years.

"On behalf of the board, management and the entire Safaricom community, I wish Bob a quick recovery and look forward to his resuming his duties as soon as the doctors allow him to do so," said Safaricom chairman Nicholas Ng'ang'a.

Vodacom Tanzania Plc, which listed in August, said last week that it had sold its 24.06 per cent stake in Helios Towers Tanzania Ltd to that company's parent company, HTA Holdings, adding that the transaction would result in an estimated profit before tax of more than $53.57 million. In the year to March this year, it had returned a profit of $20.72 million as compared with $20.62 million in the same period in 2016.

"The cash generated from this transaction further enhances our balance sheet and strategic options. The Fair Competition Commission has approved the deal," said Vodacom Tanzania managing director Ian Ferrao.

Helios Towers Tanzania Ltd owns and maintains the telecommunications towers and leases space on those towers to wireless communications services providers.

Vodacom Tanzania and Helios Towers Africa Holdings filed a notice of merger with the FCC on June 14 this year, at a time the former was going through a listing process on the DSE.

Vodacom Tanzania, which is listed on the Dar es Salaam Stock Exchange, sold 25 per cent of its shares on the Tanzania bourse in August in line with the government's mandatory listing rules for telecom companies, raising around $213 million. This week, Vodacom's shareholders approved $11.3 million in dividends, after holding their first meeting since the listing on the DSE mid-August this year.

Vodacom chairman Ali Mufuruki said his board had recommended a dividend of $0.005 per ordinary share with effect from this month in order to build confidence at the bourse.

"We have a strong business and it is important that we share our earnings so that each shareholder can benefit. The outlook is positive as we are doing well in the market," said Mr Mafuruki.

Last month, the telecom was first to pay a $617,850 fine by the the Tanzania Communications Regulatory Authority in July, for breaching the Sim-card registration rules. The other operators fined were Tigo, Airtel, Smart, Zantel and Halotel.

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