Telecommunications firm Safaricom has announced that it will pay a reduced dividend to its shareholders.
“The Board of Safaricom PLC is pleased to announce that at its meeting that was held on 24th February 2023, it was resolved to approve the payment of an interim dividend of Sh. 0.58 per ordinary share held amounting to Sh. 23.42 billion, for the year ending 31st March 2023,” Safaricom company secretary Kathryne Maundu said in a statement.
The interim dividend will be payable to shareholders on the Register of Members as at the close of business on 15th March 2023 and will be paid on or about 31st March 2023.
The dividend reduction represents a 6.0 per cent drop in interim profit distribution to the shareholders. It comes following a 10 per cent drop in net profit for the six months that ended last September to Sh. 33.5 billion.
In the same period the previous year, Safaricom had posted a 12.1 per cent increase in profit to Sh. 37.056 billion compared to Sh. 33.07 in 2020.
Safaricom partially attributed the drop in profitability to the reduction of mobile termination rates (MTR rates). According to Safaricom chief executive officer Peter Ndegwa, this reduction has cost Safaricom Sh. 500 million in the two months it has been in place.
“Given the impact of the MTR rates from 99 cents to 58 cents, a slowdown in business operations due to the elections period, increase in excise duty on sim cards and mobile phones and a failed rain season leading to more economic hardship for the country, Safaricom has done well to deliver solid revenue growth and a net income that is within the expected range,” said Ndegwa.
Ndegwa added that the company’s profits were weighed down by the expansion into the Ethiopian market. He revealed that Safaricom had invested $598 million in Ethiopia operations.