Safaricom Ltd (NSE:SCOM), commonly known as Safaricom, is the largest and most profitable wireless company in Kenya. It also has diversified operations and has retail outlets scattered across the country. Besides providing mobile voice and text services, the company also provides Internet services and sells hardware such as mobile handsets, Internet modems and routers.
Founding and IPO
Safaricom Ltd (NSE:SCOM) was founded in 1997. The company performed its IPO in 2008 during which 10 billion shares were offered to the public investors. Safaricom shares were priced at Sh5 in the IPO, which was oversubscribed because of the massive publicity campaign ahead of the IPO, and the desire by Kenyan investors to own a piece of the most successful telecom company in the country. Shares of Safaricom have risen since IPO and currently trade about Sh14 apiece, signaling a significant gain for the early investors in the telecom giant.
Maximum of 2,000 shares at the IPO
At the IPO, individual investors could only acquire a maximum of 2,000 shares because of the oversubscription that caused share shortage. However, some investors were able to open multiple accounts so that they beat the cap on the maximum amount of shares one could purchase, a move that allowed them to increase their dividend income.
In addition to price gain in the shares of Safaricom Ltd (NSE:SCOM), which have put good profits in the pockets of investors, including retailer investors, the company also returns money to its shareholders through dividends.
Kenyan laws prohibit buyback
Because the laws of Kenya do not allow of shares buyback, Safaricom Ltd (NSE:SCOM) has not been able to repurchase its shares, but there have been talks of a strategic investment arrangement to strengthen the value of the shares. A strategic investment arrangement means that the number of floated shares would be reduced to cut supply and increase demand for the shares so that prices can go up higher and put more profits in the pockets of investors.
Subsidiary
Safaricom Ltd (NSE:SCOM) is associated with a subsidiary known as One Communications Limited.
Service quality as a differentiator
To maintain its strong hold on the Kenyan lucrative telecom industry, Safaricom Ltd (NSE:SCOM) has a strong focus on quality of service to its customers. It claims to have the largest and the strongest mobile network in Kenya. The company is also currently updating its networks across the country so that it can offer high-speed Internet as the demand for the service increases countrywide.
Management
Safaricom Ltd (NSE:SCOM) is one of the Kenyan listed companies with solid management. Its current CEO is Bob Collymore, who took over from Michael Joseph, a white who helped steer the company to great success.
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