Published On: Sat, Nov 4th, 2017

Kenya’s Biggest Company Says Politics is Hurting Profit Growth

Safaricom Ltd. said political uncertainty surrounding Kenya’s prolonged presidential election period had affected the performance of East Africa’s largest company after it reported a slowdown in first-half profit and mobile-banking growth.

Sales of M-Pesa, the Nairobi-based company’s fast-growing money-transfer service, increased 16 percent to 30.1 billion shillings ($291 million) in the six months through September. That compared with a 34 percent jump a year earlier as transfers between individuals fell during Kenya’s Aug. 8 elections, Safaricom said.

A drought has also affected the spending power of the wireless operator’s customers, Chief Finance Officer Sateesh Kamath said in an interview in the capital, Nairobi. “This result is a combination of headwinds we had from elections and headwinds from a drought situation,” the CFO said.

Kenya has been beset by political violence after two controversial elections within three months. A court ordered a rerun of the first — won by President Uhuru Kenyatta — only for rival Raila Odinga to boycott the second. The disruption has cost the economy about 120 billion shillings, Treasury Secretary Henry Rotich said on KTN News channel on Thursday.

Safaricom, 35 percent-owned by Johannesburg-based Vodacom Group Ltd., posted a 9.5 percent increase in first-half net income to 26.2 billion shillings, a decline from a 32 percent increase a year earlier. Even so, the shares gained 2 percent to 25.75 shillings at the close in Nairobi on Friday, valuing the company at 1 trillion shillings.

Kenya’s Biggest Company CEO Takes Indefinite Medical Leave

“M-Pesa is still a significant proportion of the economy, and they still had good growth, better than expected,” Tracy Kivunyu, a senior analyst at Exotix Partners LLP. said by phone. Exotix downgraded its rating for Safaricom to hold from buy and raised the price target to 22.82 shillings, 8.4 percent below the consensus average of 24.93 shillings.

Chief Executive Officer Bob Collymore missed the results presentation as he’s left the country to receive treatment for an unspecified illness. The 59-year-old will be back within months, Chairman Nicholas Ng’ang’a said at an investor briefing. “We don’t know enough to be able to say what Bob’s illness is about,” the chairman said. “We are confident Bob will be back with us.”

Kenya’s opposition National Super Alliance urged supporters on Friday to boycottSafaricom and two other companies as part of so-called economic liberation program. Safaricom in September rejected allegations by the group that it failed to transmit all of the results from a vote to the electoral authority.


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