Mobile giant Safaricom’s valuation hit Sh1 trillion at the close of trading at the Nairobi Securities Exchange (NSE) on Friday, becoming the first company to do so in the history of the 63-year-old bourse.
Analysts hailed the achievement of the firm, which is only 16 years old and started trading at the NSE in 2008 but has for the last five years been the most valuable company in the country.
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It overtook the East African Breweries Limited (EABL) in 2012.
At least 7.3 million shares of the company were traded on Friday, reaching a high of Sh24.50 and a low of Sh23.50. In the last two years, Safaricom has been the biggest mover of shares.
At Sh1 trillion, Safaricom’s market valuation outstrips the combined capitalisation of the next 10 most valuable companies at the NSE among them EABL, Equity, BAT, Barclays, KCB, Co-operative Bank, Stanbic, Standard Chartered and Bamburi.
It also controls half of total investor wealth and has also been among the best-performing counters since the beginning of 2017 with a price gain of 33 per cent. It opened the year at Sh18.
During its initial public offering at Sh5 per share, the firm registered an over-subscription of 532 per cent, the fourth-highest in NSE’s history, and drew in about 800,000 Kenyans.
Sterling Capital Head of Research Eric Munywoki said Safaricom’s feat is one of the success stories of doing business in the country.
“This performance has been driven by the nature of their business and innovation but it shows local companies can also excel,” he said.
“But since the total market valuation at the NSE is about Sh2 trillion and Safaricom controls half of that, its performance will dictate how the index is performing, especially the indices where they use market capitalisation to weigh the stock,” he added.
Mr Munyoki said that there may be a bias towards Safaricom, especially by new investors, but it would not affect other securities.
“What you have seen is that most of the trading has been directed towards Safaricom and that is a trend we expect to continue,” he said.
The telecoms firm declined to comment on its feet. However, at Sh1 trillion, it is now worth Sh339 billion more than the combined market caps of EABL (Sh208 billion), Equity Holdings (Sh156 billion), Kenya Commercial Bank (Sh125 billion), Co-operative Bank (Sh90 billion) and British American Tobacco (Sh82 billion).
Last year the company made a record Sh48.4 billion profit from its 28 million subscribers.
It is notable that many companies at the NSE have for two years now announced lower profits while the telco continues to surge.
An increasing portion of its revenue is now from data and mobile money services through the popular M-Pesa.