Safaricom records strong growth prompting share price rise

Safaricom Chief Executive, Bob Collymore
Safaricom Chief Executive, Bob Collymore

Despite tough economic conditions, mobile phone operator Safaricom, which is 40% owned by UK operator Vodafone, managed to post better than expected results for the six months to September.

The company raised its net revenue outlook for this financial year to KS 35.5 billion (a rise of KS 3.6 billion) and said it expects the strong performance to continue despite most economists cutting their forecasts for national economic growth for the next two quarters.

Safari com’s strong results were driven by a strong growth in revenues from its mobile money platform M-pesa and mobile data use. Currently, 22 million Kenyans (70%)use the M-Pesa service.

Safaricom logo

Chief executive Robert William ‘Bob’ Collymore, has acknowledged that the company can no longer be considered a bellwether for Africa’s largest economy which is suffering from a sliding currency, weak fiscal policy implementation and rising interest rates.

“The mobile phone is an essential item for our customers. We’re finding that people would rather sacrifice a lot before they’d sacrifice their mobile phone.” – Bob Collymore, Safaricom Chief Executive.

According to Mr Collymore, growth has also been driven by restructuring sales and operations teams into regions. This, he explained, enabled the company to “take our services closer to the customer and enhance their experience.”

Safaricom’s share price has also risen, climbing to 15.05 shillings (a rise of 5.25 per cent) on Thursday. Overall for the tear, its share price has risen 6.9 per cent while the Nairobi index by contrast has fallen 17 per cent.

However, it isn’t all good news as  following complaints from rivals Bharti Airtel and Orange Kenya, the telecoms regulator has hired a consultant to assess whether Safaricom is abusing its dominant position. Also, there was no comment on the company’s foray into television set top boxes and content production with Mr Collymore simply describing it as a ‘work in progress’.