Kenya's Safaricom raises forecasts on sharp rise in subscribers

Safaricom CEO Bob Collymore

Mobile phones service provider Safaricom raised its full-year income forecast on Thursday due a sharp rise in new subscribers and revenue as customers increasingly used its mobile payments system and more lucrative data services in the first half of the year.

Safaricom's revenue jumped by 23 percent to 97.22 billion shillings ($952.67 million), while earnings before interest, taxation, depreciation and amortisation (EBITDA) rose 16 percent to 38.8 billion shillings.

Safaricom, which is 40 percent owned by Britain's Vodafone and has Kenya's biggest subscriber base, said it now expects net income to be in the 35.5 billion to 36.5 billion shilling range for this financial year, which ends March 31, up from 32 billion to 34 billion shillings previously.

John Tombleson, its chief finance officer, said the company has attracted 3.25 million new customers over the last year.

"It is this increased customer base, as well as additional usage from our pre-existing customers, that has driven our growth and therefore upgraded guidance," Tombleson said in a email.

Safaricom also raised its guidance for free cashflow to 27.5 billion to 28.5 billion shillings, up from 25 billion to 26 billion shillings previously.

Its revenue from calls, which accounts for close to half of the total, grew 3.5 percent, while revenue from mobile data services rose to 9.16 billion shillings from 6.50 billion shillings.

Revenue from its mobile money service, known as M-Pesa, jumped 24 percent to 19.35 billion shillings.

Data and M-Pesa account for about 30 percent of revenue.

Safaricom said earnings per share rose 23 percent to 0.45 shillings.

At 1200 GMT, Safaricom shares were up 4.9 percent at 15.00 shillings, after rising to an intraday high of 15.10 shillings.

"Twenty three percent (rise in EPS) definitely beat the market expectations, so we expect to see the share price edge up," said Linet Muriungi, senior associate at Dyer and Blair Investment Bank.

Safaricom said most of its capital expenditure during the six months went on speeding up its network expansion, with its 4G service now covering 14 towns and its 3G network now covering 73 percent of the population.