Safaricom Announces Record Profits and Stock Market Floatation

Kenya's Safaricom has reported a 40 percent jump in profits to Ksh17.19 billion (US$258.6 million) and said that it expects to have over 8 million subscribers by the end of this year. The Kenyan government has also said that it will carry out its long delayed sale of part of its holding in the company on the Nairobi Stock Exchange. The government has previously said that it may also consider a dual listing in another country to boost investment.

Safaricom plans a payout to its three shareholders of Ksh4 billion (US$60 million).

"The year ended March 31 was a record year for Safaricom," Chief Financial Officer, Les Baillie, told a press conference, "The profit before and after tax have set new records for corporate Kenya," he said.

The shareholder structure for Safaricom is subject to some controversy. The government owned Telkom Kenya owns 60% of the company - that is not in dispute. However, as we understand it, when Vodafone took its 40% stake in Safaricom back in 2000 - via a local subsidiary, Vodafone Kenya Ltd (VKL) - the company granted an option to a company known as Mobitelea Ventures Ltd. for 25% of VKL. Mobitelea exercised the option the following year, giving the company an effective 10% stake in Safaricom, and reducing Vodafone's effective stake to 30%.

It then seems that Vodafone brought back half of Mobitelea's stake at the beginning of 2003, giving Mobitelea an effective 5% stake in the company - and Vodafone 35% of Safaricom. Mobitelea is registered in the offshore tax haven of Guernsey. There have been some rumours that Mobitelea is effectively controlled by members of the inner core of the regime of former president Daniel arap Moi, but no one seems to know for sure. The rumours are boosted by the coincidence that the Vodafone purchase of half of Mobitelea's holding occurred just after Daniel arap Moi was forced to stand down as President.

The proposed floatation may shed some light on this murky affair - but we shouldn't count on it."

Posted to the site on 21st June 2007