This archive report was first published on 30 August 2019.
Safaricom's Dominance at the Nairobi Securities Exchange ¶
As of August 30, 2019, Safaricom's market valuation stood at Sh1.13 trillion, accounting for 50.7 percent of the total investors' wealth at the Nairobi Securities Exchange (NSE). This significant milestone is largely attributed to a sharp drop in the market capitalization of other listed firms.
According to the NSE records, Safaricom's market worth is now more than the combined valuation of all the other 62 listed companies. This dominance is a result of Safaricom's high profitability, driven by strong M-Pesa and mobile data performance, which has led to a 14.7 percent growth in net profit to Sh63.4 billion in March this year.
As a result, Safaricom is paying shareholders a dividend of Sh1.25 per share, totaling Sh50.08 billion, and a special dividend of Sh0.62 a share totaling Sh24.84 billion. In contrast, many other companies, including other blue-chip counters, are struggling to remain profitable in a tough economy.
The Capital Markets Authority (CMA) regularly flags the influence of top firms, such as Safaricom, on the stock market as a market risk. Should these companies encounter a shock or fall into difficulties, the effect on the stock market would be far pronounced.
As of December 2018, Safaricom controlled approximately 64.2 percent of the Kenyan market, with a subscriber base estimated at approximately 31.8 million.
