Mobile phone company Safaricom yesterday announced a Sh12.2 billion pre-tax profit, the largest ever in Kenya and East Africa.

And the announcement sparked calls, spearheaded by Nairobi Stock Exchange chairman Jimnah Mbaru for the sale of its shares to the public.

Mr Mbaru

East African Breweries, which has been the leading profit maker for decades, seems to have given way to “new economy” firms driven by technology.

The call for the shares sale was carried to the floor of the Nairobi Stock Exchange at Nation Centre, where President Kibaki yesterday launched automated trading.

This was days after it emerged the Government was yet to agree on the firm’s sale deal with Vodafone Plc. The UK firm owns a 40 per cent stake in Safaricom, but wants to increase it.

Yesterday, Finance minister Amos Kimunya, who earlier led a high-level government team at the Safaricom function, said at the NSE that he wanted to see the firm listed.

Safaricom profit for the year ended in March 2006 and released publicly seven months later due to technicalities, rose by 44.6 per cent from Sh8.4 billion the previous year.

The earnings equal 62.9 per cent of the profit before tax made by the country’s entire banking industry last year, or the total pre-tax profit made last year by Barclays, Standard Chartered, Kenya Commercial and Citibank combined.

Paradoxically, Safaricom and Celtel – the other mobile phone firm – have become some of the banks’ most important borrowers, further underscoring the growing supremacy of the service sector in Kenya.

The unquoted service firm overtook EABL, which recorded Sh8.5 billion pre-tax profit in the period ending June 30.

Mr Mbaru, in a separate interview, linked the unprecedented profit to renewed economic growth arising from good management of the national economy.

However, Celtel saw its half-year pre-tax profit to June 30 plunge to Sh63.5 million from Sh626.2 million during the same period last year.

Safaricom, which appears to have earlier recognised mobile telephony as a mass product, with a subscriber base above 4 million, derived most growth from airtime sales, especially due to the introduction of lower denomination credit cards.

From the introduction of Bamba 50, a Sh50 economy card, the company is now making Sh6 million a week in sales. Its turnover during the year rose by 29.9 per cent to Sh34.9 billion, from Sh26.9 billion the previous period.

However, sales from mobile phone handsets plunged to Sh393 million, from Sh540 million last year, partly due to falling prices “and the preference of some consumers to buy used or stolen phones and not from the official channels,” chief finance officer Les Baillie told investors yesterday.

And terming the profit a “fantastic job,” Information minister Mutahi Kagwe said Safaricom had demolished the myth that telecommunications is a dormant sector.

Source- http://allafrica.com