Serrari Group

Safaricom, the leading telecommunications giant, has initiated the early distribution of a final dividend amounting to a staggering Sh24.84 billion to its shareholders, thus contributing to an enhanced liquidity infusion within the economy. This strategic move saw investors receiving their concluding dividends on Tuesday, which were valued at Sh0.62 per share. This figure signifies a 17.33 percent reduction when compared to the previous year’s dividend of Sh0.75 per share.

The reduction in the final dividend, in contrast to the total payout of Sh30.04 billion recorded the previous year, aligns with a 22.2 percent downturn in the net profit reported for the fiscal year concluding in March 2023.

The company’s profit margins dipped to Sh52.48 billion from Sh67.49 billion within the prior year, marking the third consecutive year of decline. This decline can primarily be attributed to substantial capital investments made in Ethiopia, which weighed heavily on profitability.

Noteworthy among the beneficiaries of this dividend distribution is the National Treasury, which boasts a 35 percent stake in the region’s most lucrative enterprise. The Treasury is anticipated to receive Sh8.69 billion in dividends, a decrease from the Sh10.52 billion received the previous year, based on its ownership of 14.02 billion shares in the firm.

When accounting for the earlier interim dividend payment of Sh8.13 billion this year, the total Treasury payout is expected to sum up to Sh16.82 billion.

In contrast, multinational corporations Vodacom Group Limited and Vodafone Group Plc are set to share a combined gross payout of Sh9.92 billion, reflecting their collective 39.93 percent stake in Safaricom. This distribution adds up to a year-end windfall of Sh19.20 billion for the two organizations.

Overall, Safaricom’s dividend allocation for the reviewed fiscal year has declined to Sh48.08 billion, signifying a dip from the previous year’s figure of Sh55.69 billion.

The East and Central African region’s leading profitability contender, Safaricom, experienced hindrances in its operational trajectory. Factors such as the electoral period’s business stagnation, heightened excise duties on sim cards and mobile phones, as well as a reduction in interconnection charges between mobile operators, collectively contributed to the challenge.

Peter Ndegwa, the Chief Executive Officer, addressed these challenges, stating, “We encountered increased regulatory pressures, particularly the decline in mobile termination rates. Our clientele also experienced reduced disposable income while demanding greater value and superior experiences from our products and services.” Ndegwa made these remarks during the company’s full-year performance announcement on May 11.

Safaricom’s proactive approach in accelerating the distribution of dividends showcases its commitment to shareholders and the broader economic landscape, while the company continues to navigate multifaceted challenges in the telecommunications sector.

Photo Source: Google

30th August, 2023

Delino Gayweh

Serrari Financial Analyst

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