AccessKenya profit drops

March 22, 2010
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, NAIROBI, Kenya, Mar 22 – Listed internet service provider AccessKenya Group has reported a decline in its profits before tax to Sh182.3 million for the full year ended December 31, 2009.

The Group posted Sh263.8 million in the corresponding period in 2008.

Releasing the results on Monday, AccessKenya Executive Director David Somen attributed the decline to heavy capital expenditure during the period as well as a poor performance from the group’s IT business.

“Earlier this year there was a big focus on very high revenue, low margin hardware sales which ramped up our costs,” Mr Somen said.

Revenues for the twelve months rose by 32 percent from Sh1.57 billion to Sh2.07 billion on the back of increased growth in retail and corporate data segments.

The company has already restructured the IT segment, focusing more on recurring revenue activities. As such, the unit now concentrates on Service Level Agreements (SLA) ensuring the company is able to do away with the loss-incurring venture.

“We expect to reap in going forward,” he said.

AccessKenya spent close to Sh1.2 billion over the last two years in building its fibre optic network infrastructure. This has seen the company’s broadband capacity increase only to be met by slow take up of the product.

Mr Somen however believes the strategic decision taken by the company will see it better placed in the market.

“We had to build a huge network to be ready for the fibre. Now that we have the infrastructure in place, it is now up to us to fill in the gap effectively and we believe it will take root in 2010.”

According to Managing Director Kris Senanu, the market had stabilised giving AccessKenya a competitive advantage. Through the investment, the company was able to transition its customers from satellite to fibre optic connections that saw it slush its prices by approximately 80 percent.

“A lot of people are talking about pricing in this market forgetting one crucial element which is reliability that guarantees we are able to retain as well as attract new customers,’ Mr Senanu said.

He said the broadband market remains significantly under-penetrated adding great opportunities linger for the Group to leverage its competitive advantages and continue to build market share.

“We believe there are close to 400,000 people who do not have access to broadband and that is what we will be aggressively going after,” he said.

The company intends to get 1,000 new customers in its corporate market and a further 7,000 in the residential market. The intention is however to restructure the residential cluster to capture a wider and emerging market in the Small and Medium Enterprise segment.

The Board recommends a total dividend of Sh0.30 per ordinary share held.
 

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