Safaricom Shares Rise to an all-time High

Safaricom shares have risen to an all-time high of Ksh 40.50 after the company made a formal bid for the Ethiopia Telco License.

Safaricom submitted the proposal as part of a consortium that included Vodafone, Vodacom, CDC Group and Sumitomo Corporation.

Ethiopia is one of the world’s last major closed markets with a population of over 100m. The government is seeking to privatise the telecommunication sector by awarding two telecom licences to multinational companies. The companies have been attracted by the huge growth potential that can see them achieve a penetration rate of 44 per cent of the total population.

Safaricom’s chances of winning one of the licences got a major boost after it emerged that it was one of only two bidders to take part in the auction.

Another factor influencing the rise in share prices is the release of Safaricom’s earnings report next week. Shareholders expect Safaricom to announce strong earnings growth and a subsequent dividend payout.

What it all means for you

Safaricom shares have always been the most traded shares in the NSE. This is attributed to their dominance of the telco market, M-Pesa, ever-increasing profitability and dividend payments.

If you are planning to buy shares, Safaricom is a great option for the long term. If you are planning on buying to make a quick profit from the Ethiopian deal result, be warned that Ethiopia has said that they may abandon the whole deal if it does not meet its criteria.