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Safaricom Raises Dividend 10% as Profit Beats Estimates

Safaricom Ltd., East Africa’s biggest mobile-phone company, climbed the most in more than two months after reporting full-year profit that beat analysts’ estimates and unexpectedly raising its dividend 10 percent.

Safaricom shares rose 3 percent to 3.45 shillings by the close in Nairobi, the largest gain since March 6, according to data compiled by Bloomberg.

Net income fell 4 percent to 12.6 billion shillings ($151 million) or 32 cents a share, in the 12 months through March, Chief Executive Officer Bob Collymore told reporters today in Kenya’s capital. The average estimate of five analysts surveyed by Bloomberg was a profit 10.4 billion shillings. Safaricom said it plans to pay a dividend of 22 cents per share.

The results were “much stronger than the market expected, based on a significant second-half rebound,” Aly-Khan Satchu, chief executive officer of Nairobi-based Rich Management, said by phone. “No one expected an increase in the dividend.”

Profit declined as a result of unrealized foreign-exchange losses amounting to 1.1 billion shillings and an increase in interest payments by 600 million shillings, Collymore said in an interview in Nairobi today. Sales rose 13 percent to 107 billion shillings, as the number of customers increased 11 percent to 19 million.

The company increased call charges on Oct. 1 for the first time in 11 years amid a weakening currency and rising inflation in East Africa’s biggest economy. Rates increased an average of 1 shilling per minute after the company reported a 47 percent plunge in first-half profit amid a price war with competitors.

Business improved in the second half as increased tariffs boosted voice revenue and the shilling recovered against the dollar after hitting a record low, Collymore said.

Data Growth

The executive forecast profit to rise in the year through March 2013.

“The big growth is going to come from data,” he said.

Both data penetration and usage in Kenya are still low and the company will boost that by providing more affordable smartphones to its customers, Collymore said.

Competitors of Safaricom, whose main owner is Vodafone Group Plc, include units of France Telecom SA and India’s Bharti Airtel Ltd. and Essar Group.

The company plans capital expenditure of 21 billion shillings in the financial year ending March 2013, with most of that being spent on its fiber-optic network, Collymore said in the interview. Investment last year was 25.28 billion shillings.

Safaricom aims to reduce capex to 20 percent of sales from about 24 percent now, Collymore said, without giving a timeframe.

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