Safaricom Sees Higher Income as CEO Collymore Set to Return

(Bloomberg) -- Safaricom Plc, East Africa’s largest company by market value, raised its guidance for full-year earnings as Chief Executive Officer Bob Collymore said he expects to return to Kenya soon from medical leave.

Earnings in the 12 months through March 2019 are expected to grow as much as 12 percent to 89 billion shillings ($886 million), from 79.3 billion shillings last year, Chief Financial Officer Sateesh Kamath told reporters Wednesday in the capital, Nairobi. The company plans to double the number of home-internet connections and upgrade its mobile-money platform to grow its M-Pesa business in the year ahead, he said.

“We remain confident that the macroeconomic conditions will have gradual improvement, providing a conducive environment for our company to continue to deliver growth,” Kamath said. “We are hence moving up our EBIT guidance.”

Kenya’s economy expanded at the slowest pace since 2011 last year, reined in by a drought that curbed farm output, a protracted presidential election and a slowdown in bank lending to the private sector. Growth is expected to accelerate to as much as 6 percent this year from 4.9 percent in 2017, according to government estimates.

Profit Up

Despite the economic slowdown, Safaricom grew net income by 14 percent in the 12 months through March to 55.3 billion shillings. Revenue increased 9.8 percent to 233.72 billion shillings, driven by a 14 percent rise in M-Pesa revenue, 24 percent growth in mobile-data earnings, and a 5.1 percent advance in customer numbers.

Safaricom said 28 percent of its total revenue, or 62.9 billion shillings, was from M-Pesa, its mobile-money service. Plans to introduce 1Tap, a tap-to-pay tag to facilitate M-Pesa purchases at vendors’ points of sale, are still in limbo awaiting the central bank’s approval, Kamath said.

“M-Pesa has lots more to offer and it will continue to be the engine for growth,” he said. “There’s also pent up demand for mobile data.”

Safaricom’s shares gained as much as 4.4 percent to the highest since April 18. The stock has advanced 10 percent so far this year, outpacing a 4.4 percent increase in the Nairobi Securities Exchange All Share Index.

Back Soon

“The fact that the business ran well while Collymore was away tells you the strength of the team,” Eric Musau, an analyst at Nairobi-based Standard Investment Bank, said in an interview.

Collymore, 60, went on medical leave in October to receive specialized treatment for an unspecified illness, leaving Kamath to temporarily take over his responsibilities. The CEO said he’s making “pretty good progress” with his team of medical specialists in London.

“I’ve just entered the final phase of treatment and expect to be back in Nairobi as soon as the doctors feel that my immune system is sufficiently robust to withstand the infection risks that are usually associated with air travel,” Collymore said by video-link from London. “It’s very difficult to say exactly when that will be, but close monitoring by the medical team will continue here in London for a number of weeks to come.”

©2018 Bloomberg L.P.