Safaricom’s Sh63B is a modest income for a day’s work!

By MUNGAI KIHANYA

The Sunday Nation

Nairobi,

12 May 2019

Some very large amounts of money were mentioned in the press the last few days. First was the Sh63 billion net profit that was announced by Safaricom PLC. Though not unexpected (the previous years income was Sh55B), this figure was so big that some people termed it “immoral”.

The second large sum of money was the Sh691 that the Independent Electoral and Boundaries Commission (IEBC) spent on food in 2017. The question elicited by this was: do these people eat five-star hotels every day?

These reactions are not fair because the number have not bee placed in their proper perspective. Yes; Sh63 billion is a lot of money, but we must ask where it came from.

Safaricom PLC has almost 32 million active customers. “Active” means that the clients topped up their subscriptions at least once during the last 90 days. If we divide Sh63B by 32M, we find that the average profit per subscriber was about Sh2,000 during the year.

Diving that further by 365 days of the year, we find that the average contribution to profit per customer was about Sh5.40 daily. Suddenly, the profit does not appear too much. In my view, it is a modest income for an honest day’s work!

To those who feel that the Sh63B is too much, my response, as always, is this: contact a stock broker and start buying Safaricom PLC shares. They are currently going for less that Sh30 each so with less than Sh3,000, you can easily get the minimum normal trading quantity of 100 shares.

Speaking of the shares; Safaricom is broken into over 40 billion pieces. Thus, the Sh63B net profit works down to just Sh1.58 per share. Not an “immoral” amount!

Thus, if you buy 100 shares, your portion of the profit will be just Sh158. Now think about that: you invest Sh3,000 and your share of the profit for one year is Sh158: is that good or bad or fair?

To be clear: this profit per share is not the money that will be paid to shareholders. In their wisdom, the directors of Safaricom have recommended a “normal dividend” [I don’t know what they mean by “normal”] of Sh1.25 per share and a “special” dividend of Sh0.62.

This will make a total of Sh1.87 per share. I suspect that they split it into "normal" and "special" because they don’t want it to be abvious that they are paying out more money (Sh75B) than the company made (Sh63B) …

Regarding the IEBC’s Sh691M spent on food; we must bear in mind that during the 2017 elections, the Commission employed 360,000 staff who served for an average of 20 days each. The money works down to about Sh96 per person per day.

That’s not too much; in fact, it seems too little! Nevertheless, a reader mentioned to me that IEBC does not provide lunch to election clerks. If that’s the case, then the Commission still has some serious explaining to do!