Mobitelea reaps millions in Safaricom’s payout

Treasury and Vodafone Kenya will pocket Sh2 billion in proposed dividends after Safaricom announced record profits.

The two are the shareholders of East Africa’s most profitable company.

Mobitelea Ventures, the shadowy Guernsey-registered entity, is among the major indirect beneficiaries of Safaricom’s sterling performance for the year ending March 31, 2008.

Mobitelea, which holds a 12.5 per cent share in Vodafone Kenya, will get about Sh100 million in dividends since it owns five per cent of Safaricom through its stake in Vodafone Kenya.

Share allocation

However, the hundreds of thousands of investors who applied for Safaricom shares last month, will not benefit this time around because they have not become shareholders.

The results of the IPO’s share allocation will be released Thursday and the shares credited to the CDS accounts of the new shareholders.

The dividends are for the period ending on March 31.

A spokesperson for Safaricom Thursday said that the Sh2 billion dividends will be shared out between the mobile phone company’s two shareholders — the Treasury and Vodafone Kenya.

While releasing the financial results on Tuesday, Safaricom directors proposed the Sh2 billion dividend after the company recorded a Sh19.9 billion pre-tax profit in
the financial year ending on March 31.

The amount paid out as dividend this year is half what the company paid out last year although the profit margin has increased by over Sh2 billion.

Last year, Mobitelea got Sh200 million in dividends after the Safaricom directors paid out dividends of Sh4 billion.

This year, Vodafone Kenya, the local arm of UK’s Vodafone Plc, will receive a Sh700 million cheque as dividend.

The company holds a 40 per cent stake in Safaricom while the Treasury holds the other 60 per cent.

Treasury’s stake was transferred from Telkom Kenya late last year as part of the parastatal’s privatisation plan.

When the dividend is paid out, the Treasury will pocket Sh1.2 billion.

But it will get another Sh6.09 billion in income tax, up from Sh5.1 billion that Safaricom paid in 2007.

Telkom Kenya has in the past failed to share in Safaricom’s dividends because the money was used to pay interconnection charges it owed Safaricom.

Wednesday, former MPs Justin Muturi and Paul Muite raised questions over who were the real beneficiaries of the announced profits.

The two demanded that retired president Daniel arap Moi and holders of the ministerial positions at the time Mobitelea acquired shares in Vodafone Kenya owe the public an explanation.

“It is those individuals who were in power during the Moi regime that can tell Kenyans who the real owners of Mobitelea are.

"These are the individuals who will pocket a huge chunk of the profit that Safaricom has just announced. You and I have nothing to be proud of,” Mr Muite said.

Until he lost his seat in the December election, Mr Muite was chairman of the departmental committee on Administration of Justice and Legal Affairs while Mr Muturi was chairman of the Public Investment Committee.

The two committees were involved in investigations into the ownership of Safaricom with a view to unravelling the directors of Mobitelea.

Mysterious owners

Mr Muite said that people who served as Finance and Transport and Communications ministers, and the chairman and managing directors of Telkom Kenya know who the mysterious owners that are now benefiting from the profits of the country’s leading mobile service provider are.

“We know who the chairman of Telkom Kenya was and its managing director, who the Finance minister was and the person who headed the Ministry of Transport and Communications.

“And we know that those days Moi micro-managed all matters and time has come for him to be asked to tell us what he knows,” said the former Kikuyu MP.

Mr Muturi questioned the rationale behind the decision by Safaricom to set aside a dividend of only Sh2 billion out of the total Sh19.9 billion profit.

He urged the current PIC chairman, Mr Mithika Linturi and his team, to go through the audited reports of Safaricom with “a tooth comb” to pick out details that will show how the profits were being spent.

Investigations by PIC last year revealed that when Vodafone UK entered the Kenya market and acquired a stake in Safaricom, it used a local company known as Mobitelea for advice.

For this advice, Mobitelea was given a 25 per cent ownership in Vodafone Kenya, which translated to 10 per cent of Safaricom.

Evidence provided last year through a letter by the Chief Executive Vodafone Americas/Africa/China/India, Mr Gavin Darby, stated that Mobitelea Ventures was registered in Guernsey Islands in the British Isles and was offered 25 per cent of Vodafone Kenya by the Vodafone Group.

The transaction was completed in cash in 2002 and translated to 30 per cent of Safaricom being owned by Vodafone Group and 10 per cent by Mobitelea.

However, in January 2003, Vodafone UK bought back 12.5 per cent of the Vodafone Kenya shares from Mobitelea thereby reducing Mobitelea’s stake in Safaricom to five per cent.

Wednesday, Mr Muite said: “Five per cent of the billions that were announced is going directly to individuals who own Mobitelea. This is a scandal in the same rank as Anglo Leasing and Goldenberg.”

Details from the released results shows that shareholders funds increased from Sh32.7 billion in 2007 to Sh42.6 billion this year, a 30.1 per cent growth.

Safaricom’s profit after tax rose to Sh13.8 billion this year compared to Sh12 billion in 2007, representing a 15.3 per cent growth.

The mobile service provider now has 10.2 million customers up from 6.2 million in March 2007.

Over the last one year, revenue increased from Sh47.4 billion to Sh61.3 billion, a 29.3 billion increase.

The company’s record performance comes as competition intensifies in the local cellular phone market with the entry of new players.

Econet Wireless, which is partly owned by India’s Essar, is set to roll out its mobile services in July, while Telkom Kenya, owned 51 per cent by France Telecom, is planning a rollout in September.