Safaricom shares surge on Fuliza dividends

Investors whetting their appetite over Safaricom’s profits especially from lending facility Fuliza have pumped the telco’s shares to almost Sh30.

Safaricom’s price jumped 5.0 percent day on day to Sh29.55 as investors anticipate stellar performance in its FY19 earnings announcement tomorrow.

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Analysts have urged clients to buy the telcos with Apex Capital forecasting service revenue to record a 7.7 percent year on year growth to Sh241.2 billion with the bottom-line burgeoning 17.7 percent year on year to Sh65.1 billion.

“With the telco’s dividend policy of 80.0 percent payout ratio, we expect a DPS of Sh1.30. The huge cash position may see the telco announce a special dividend of between Sh0.91-1.06,” Apex Capital said in a note to investors.

Fuliza is set to line the performance of M-Pesa revenues as well as competition dynamics that secures M-Pesa revenues going forward.

Fixed data is growing at great pace on-boarding clients as Safaricom pushes cost-effective acquisition while free cash flow means Safaricom has the muscle to push new innovations even further.

Voice and SMS have however trailed and so has mobile data following imposition of CS Henry Rotich data tax. Safaricom opted to absorb extra excise duty levied whilst also offering richer data plans to clients to fend off competition.

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Safaricom is also navigating a tricky transition as the term of CEO Bob Collymore comes to an end while another effort has been launched to split the telcos.

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