Safaricom to pay Sh18b as H1 dividends

By John Otini
Friday, February 12th, 2021
Mpesa transaction. Photo/File
In summary
    • Safaricom’s half year interim dividend is expected to be paid out by March 31 and will comprise of registered shareholders as of the close of business on March 5.
    • Move expected to push up the demand for Safaricom shares on profits from stockwhich is  currently trading at historical highs  which anchored the recovery of performance at the bourse in the year to date.

Safaricom yesterday announced a half year dividend payout of Sh18 billion, for the year ending March 2021, with the government and Vodacom set to get Sh6 billion each.

The announcement makes the telco one of the few listed companies to declare dividends amidst the coronavirus  pandemic, even as it waived fees on its mobile money transfer service M-Pesa for transactions below Sh1,000.

“The board of Safaricom PLC is pleased to announce that its meeting held on February 10, 2021 resolved to approve the payment of an interim dividend of Sh0.45 per ordinary share held amounting to Sh18.029 billion for the year ending March 31, 2021,” said Safaricom board in a statement.

The board said this was in recognition of its solid half-year performance, “and to support our shareholders during this the time period of Covid-19 pandemic,” the company added.

Government share

The government which is the majority shareholder alongside Vodacom will each bank Sh6 billion.

They both own 35 per cent of Safaricom. Vodafone which owns 5 per cent of Safaricom will get Sh900 million.

The remaining 25 per cent of the telco’s shares are free-floating on the stock market. The free-floating stake is 45 per cent owned by foreign corporate investors while about 39 per cent is owned by local companies.

An estimated 15 per cent is owned by local individuals with 0.5 per cent of the free-floating stake owned by foreign individuals according to Safaricom data.

The company’s half-year profit ending September 2020 dropped six per cent to Sh33 billion compared to the same period in 2019.

The telco attributed the decline to the waiver of fees on M- Pesa transactions by the central bank to increase cashless transactions and a drop in voice revenue.

President Uhuru Kenyatta had asked banks and mobile money providers to reduce costs of transactions to allow customers use cashless modes of payment as part of the measures to prevent the transmission of Covid-19.

The interim dividend will be paid to shareholders on the register of members as at the close of business on March 5, 2021 and will come through on March 31, 2021.

The company’s stock has been rallying in the recent past to a record Sh36 a share ahead of the dividend payment. The stock was trading on Thursday at Sh36.60 a share.

Safaricom’s earnings in the second of the financial year are also expected to improve after the government rolled back its waiver on M-Pesa transactions.

The company is also banking on rising data connections to lift its earnings at a time when voice revenues SMS are falling due to rising internet bandwidth.

Ethiopia entry

The company which is also seeking financing for its Ethiopia entry could be keen to trim its dividend as it seeks to ramp up capital expenditure.

Last year the company announced a full-year dividend of Sh56 billion having dished out Sh74 billion the previous year in dividends.

Safaricom’s market capitalisation is now 60 per cent of the entire market capitalization.

The telco was reported to having borrowed Sh24 billion to fund its dividend payment and build its infrastructure, the way cash flush tech companies like Apple do, to pay dividends.

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