Tanzanian billionaires Aunali and Sajjad Rajabali have become the top individual investors in Kenya’s giant telecom operator Safaricom #ticker:SCOM after they bought an additional 11 million units worth Sh277 million.
The August regulatory filings at the Nairobi Securities Exchange (NSE) show that the Rajabalis, who bought 10 million shares in April, now hold a total of 21.1 million shares valued at Sh527 million.
This has effectively relegated billionaire investors Ramaben Patel (with 19.4 million shares worth Sh485 million) and John Kibunga Kimani (12.1 million units valued at Sh302 million) to second and third places respectively.
The Rajabalis’ accumulation of Safaricom shares, seen as a signal of their confidence in the telco’s future prospects, comes amid a major dip in the company’s share price, which now stands at Sh25 — a 23.6 per cent drop from a high of Sh32.75 in April.
Other listed firms have also recorded significant share price declines, with the benchmark NSE 20 Share Index receding to the bear trough seen in January last year.
The Rajabalis have been accumulating shares in NSE-listed firms over the past two years, with their cumulative investment now standing at more than Sh1.8 billion.
Besides Safaricom, the duo has bought significant stakes in Equity Group #ticker:EQTY , KenolKobil #ticker:KENO and I & M Holdings #ticker:I&M , among other listed firms.
Safaricom is Kenya’s most profitable company, with a dominance in the various segments of the telecommunications market, including voice, mobile data and mobile cash transfers.=Analysts say the attractiveness of Safaricom going forward will depend on the scope and intensity of proposed regulations on market dominance and competition.
Safaricom made a net profit of Sh55.2 billion in the year ended March, a 14.1 per cent rise from Sh48.4 billion the year before. The company declared a dividend of Sh1.1 per share or a total of Sh44 billion, representing an 80 per cent payout.
The telco’s generous dividend distribution has been supported by minimal debt, with the company funding its heavy capital expenditure from internally generated cash. The biggest uncertainty about Safaricom’s future performance is seen arising from new regulatory actions. The government last week also introduced higher taxes on telecommunication services, a move that is expected to lead to higher prices and discourage usage.= Excise duty on mobile calls and data rose to 15 per cent from the previous 10 per cent.
The telcos could also suffer lower margins should they decide to absorb the extra taxes instead of passing them on to consumers. “Impact on telcos could be material — especially for voice revenue but a pricing strategy trading off revenue and volume may mitigate the net impact,” Standard Investment Bank (SIB) said in a research note.
The government plans to raise some Sh14 billion in the fiscal year ending June 2019 from excise taxes on telecommunication and bank services, among others.