Safaricom announces 10 percent raise in dividend (Kenya)

Safaricom Ltd. has raised its dividend by 10 percent after full year profit beat analyst estimates, causing the share price to climb 3 percent to $0.5. Chief Executive Officer Bob Collymore, said that net income fell 4 percent to $151 million, in the 12 months through March.

Collymore told BN in an interview that profit declined as a result of unrealized foreign-exchange losses amounting to $13.05 million and an increase in interest payments by $7.12 million. Sales rose 13 percent to $1.27 billion, as the number of customers increased 11 percent to 19 million.

As per the report, the company increased call charges on Oct. 1 for the first time in 11 years amid a weakening currency and rising inflation in East Africa’s biggest economy. Rates increased an average of $0.01 per minute after the company reported a 47 percent plunge in first-half profit amid a price war with competitors.

Collymore added that business improved in the second half as increased tariffs boosted voice revenue and the shilling recovered against the dollar after hitting a record low.

Talking about the future profit growth, Collymore said that both data penetration and usage in Kenya are still low and the company will boost that by providing more affordable smartphones to its customers.

The company plans capital expenditure of $250 million in the financial year ending March 2013, with most of that being spent on its fiber-optic network, Collymore revealed in the interview. Investment last year was $300 million.

Safaricom aims to reduce capex to 20 percent of sales from about 24 percent now, Collymore said, without giving a timeframe.