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Safaricom posts Sh15b profit

NAIROBI, Kenya, May 21 – Mobile phone service provider Safaricom has announced Sh15 billion pre-tax profit for the year ending March 2009.

The results represent a 23.3 percent dip compared to last year’s Sh19.9 billion pre-tax profit. Total revenue rose by 14.8 percent to Sh70.48 billion while subscriber numbers were up 31 percent to 13.36 million.

During announcement for the results on Thursday, the company announced that average revenue per user (ARPU) fell 22.9 percent to Sh475.

Safaricom Chief Financial officer Chris Tiffin said the results were positive bearing in mind the “trading conditions, increased cost structure because of inflation and devaluation of the shilling.”

“We are very proud that we can still report profit before tax of over Sh15 billion.”

 Safaricom Chief Executive Officer Michael Joseph said the company managed to outwit its competitors who had heightened price wars.

“The biggest impact on us was more inflation where we saw a five percent decline in revenues as opposed to the 40 percent tariff reduction due to competition that really did not impact on our bottom-line,” Mr Joseph said.

The company’s board has approved a Sh4 billion dividend payment which translates to a final dividend of 10 cents per share.

The money transfer service MPESA is now contributing 34 percent to the company revenues.

Mr Joseph noted that the Safricom’s future is pegged on increased penetration especially in the rural areas. He however noted that with increased penetration into rural areas where consumers\’ disposable income was lower, it expected that voice ARPU would continue to decline.

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“But internet penetration is at less than 10 percent, so there is significant opportunity to compensate,” Mr Joseph said.

The company has increased its provision to borrow to Sh20 billion from the Capital Debt markets from last year’s Sh11 billion last year.

“What this simply means is that we can borrow up to Sh20 billion for capital investment whenever the need arises,” said Mr Tiffin.

Meanwhile Mr Joseph said that while the company’s Annual General Meeting would be held in August, but the results would be posted to shareholders electronically.

“We will also offer the option of sending dividends to shareholders on the MPESA service,” he said.

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