Safaricom Makes $12.77 Million Profit, a Record for Region

Tuesday, October 31, 2006

Mobile company Safaricom has posted the biggest profit ever in East Africa – Ksh 12.77 billion ($174 million) – edging out listed company East African Breweries Ltd from the position of the biggest profit maker in the region.

The star performance is likely to impact on the negotiations going on between the government and Vodafone Plc of the UK over the impending sale of a 9 per cent government stake in the company to Vodafone.

Analysts say that the government is likely to demand more money for the shares.

Currently, the government owns 60 per cent of the company through Telkom Kenya with the remaining shares being held by Vodafone.

Last year, Vodafone made an offer of $100 million for 11 per cent shares of the company.

The International Finance Corporation of the World Bank which was appointed by the government to value the company, is said to have valued 11 per cent of the company at around $165 million.

But it is understood that during negotiations with Vodafone in London, both sides started the negotiations by quoting much higher figures than the IFC’s valuation.

Safaricom, with a subscriber base of about 4.5 million, has derived most of its growth from airtime sales, especially the introduction of the lower denomination top-up cards.

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Source: The East African (link opens in a new window)