Kenya’s Safaricom plans network expansion after earnings rise

Kenya’s Safaricom Ltd plans to expand its mobile and fibre optic network and will launch a home broadband service to boost growth after posting a 17 percent rise in annual earnings.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose to 71.2 billion shillings ($748.7 million) in the year ended March, lifted by a 13 percent rise in revenue to 163.4 billion shillings.

Safaricom, whose capital expenditure rose 21 percent to 33.7 billion shillings, plans to expand its 3G network to cover 80 percent of the population from 69 percent at present.

It also plans to roll out faster 4G services to 13 more towns by December from two currently, and add fibre optic connections to 10 more towns.

“We are continuing just to roll out our standard network, continuing to update the network, continuing to roll fibre out. So it’s kind of largely business as usual,” Chief Executive Bob Collymore told reporters on Thursday.

Collymore, whose term as chief executive was extended for two years, said Safaricom would launch set-top boxes which will receive TV and data services using 4G on Friday.

“Effectively it gives you broadband access in the home,” he said.

Safaricom said full-year net income, which jumped 38 percent to 31.87 billion shillings, was likely to be 32-34 billion this financial year.

The company, 40 percent owned by Britain’s Vodafone Group PLC, expects free cashflow of 25-26 billion shillings from 27.5 billion last financial year.

Its voice service revenue rose 4 percent to 87.4 billion shillings, while that from money transfer service M-Pesa was up 23 percent to 32.6 billion.

Mobile data services revenue was up 59 percent to 14.82 billion shillings and that from short message services jumped 15 percent to 15.6 billion.

It said earnings per share rose to 0.80 shillings from 0.57 shillings and proposed a dividend per share of 0.64 shillings, up from 0.47 shillings.

At 0939 GMT, Safaricom’s shares were down 2 percent at 17.20 shillings on the Nairobi Securities Exchange.

Daniel Kuyoh, research analyst at Kingdom Securities, said the drop was due to profit taking by some investors, who had already priced a better full-year performance.

“A lot of investors that we are seeing are simply offloading … The results coming out today have probably strengthened a lot of investors, those are the speculators (taking profit),” he said.