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Safaricom to save Sh351m in AGM

NAIROBI, Kenya, Jun 30- Mobile phone operator Safaricom has announced a raft of measures that will see it save approximately Sh351 million in preparations of its Annual General Meeting (AGM) in August.

Chief Investor Relations Officer Les Baillie disclosed that as part of their plan to break away from tradition, Safaricom would not give any freebies to the 30,000 shareholders expected at the first AGM since they were listed on the stock exchange and that they would dispatch the annual reports electronically.

“If 30,000 people turned up and we gave (each of) them an umbrella, a cap, packed lunch, a T-shirt and transport that would cost us Sh40million. If 50,000 showed up, the amount increases to Sh60million,” he explained on Tuesday.

Pointing to the Kenya Communications Amendment Act 2008 which provides for the use of electronic means to disseminate statutory shareholder information, Mr Baillie said the firm would do so through their website, digital discs and a bridged version of the important details in the national newspapers.

They would only print the full version upon request. Producing the 830,000 reports, printing the copies and posting them would cost an estimated Sh239.5million, he added.

With a shareholder base of 830,000, Safaricom would also incur huge costs (Sh73million) if it opted to make the dividend payment through the cheque or Electronic Funds Transfer (EFT) and that’s why it intended to send the dividends of below Sh35, 000 via their money transfer service, M-Pesa.

“This does not require the shareholder approval because it requires a change to the Memorandum and Articles of Association which at the moment provides for us to pay dividends via cheques, ETF or warrants,” he added.

The board of director recommended a payout of Sh4billion which translates into Sh0.10 per share. Thus the average dividend payment to retail shareholders is Sh491 while those who received the minimum allocation of 420 shares during the Initial Public Offer will only get Sh42.

Mr Baillie said they had consulted widely in coming up with these cost cutting measures whose savings would go towards the implementation of programs that could enhance the shareholder value.

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What could they use this money for? He posed.

“We can pay that back to shareholders as increased dividends. We could build about 17 base stations to increase coverage across the country, we could use it for promotion and advertising to increase our revenues and customer loyalties and it could pay for a one and a half of our administration costs,” he stated.

At a press briefing, the official emphasised that all these proposals were meant to bring back the purpose and importance of AGM’s in the country which have over the years been eroded as many shareholders now take them as social occasions.

“People do not necessarily turn up to ask the board questions or to receive the annual reports or approve the dividends,” he said of the phenomenon which sees many shareholders leave the meetings after collecting the giveaways and which has seen listed firms incur huge costs.

By executing these measures, Safaricom will have managed to bring down the cost of holding the August 19 AGM to Sh20million which will be spent on beefing up security and hiring between 400-500 personnel to register the shareholders.

Mr Baillie revealed that they would be in discussions with regulators such as the Capital Markets Authority to come up with ways to implement some of these plans.

Part of the areas that will be looked at is whether Safaricom can waive the withdrawing fee for shareholders who’ll opt to have their dividend sent through M-Pesa.

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