Safaricom of Kenya Advances Most in Two Weeks as CEO Reassures on Margins

Safaricom Ltd., Kenya’s biggest mobile-network operator, surged the most in two weeks after saying it isn’t prepared to lose market leadership and it will protect margins even as competitors lower call charges.

The stock gained as much as 4.1 percent to 4.8 shillings before trading 2 percent higher at 4.7 shillings by 11:14 a.m. in Nairobi.

The biggest company by market value in Kenya, Safaricom may report a “dip” in revenue while profit will be little changed in the fiscal year to March 2011 after Bharti Airtel Ltd.’s Zain Kenya unit, Essar Telecom Kenya Ltd. and Telkom Kenya Ltd. lowered prices in August, Chief Executive Officer Michael Joseph said yesterday. Margins are “sacred” and rivals’ call rates of 3 shillings per minute are “not sustainable,” he said.

Safaricom reported profit of 15.15 billion shillings ($190 million) in the year through March, and the median estimate of 10 analysts surveyed by Bloomberg is for net income in fiscal 2011 to rise 21 percent to 15.5 billion shillings.

Zain Kenya, the first to cut prices has been running daily advertisements in newspapers and on television and radio concerning its price reductions.

“The media blitz by Zain had scared everybody,” Aly-Khan Satchu, an independent analyst based in Nairobi, said by phone. “We are at the tail end of the overreaction by investors and I see it rebounding from here, he said.

To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net.

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