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Safaricom becomes Kenya's first company to hit the $9.6 billion market valuation

The telco's shares also hit a new all-time high of $0.24 which saw its shareholders enjoy a $2 billion gain in their wealth.

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Kenya’s leading telecommunications operator, Safaricom, has become the first company in the country to surpass the $9.6 billion (Kshs1 trillion) mark in market valuation during trading.

During the intraday trading session, the telco’s share hit a new all-time high of $0.24 (Kshs 25) which saw its shareholders enjoy a $2 billion (Sh214 billion) gain in their wealth.

The stock closed Friday at an average price of Sh24.50, earning it a market capitalisation of Sh981.6 billion — which is 42.9 per cent of the total value of all the 63 firms listed on the Nairobi Stock Exchange (NSE).

This level of capitalization sees Safaricom valued at nearly a seventh of the country’s GDP of $68.3 billion (KSh7.1 trillion).

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Since March 2017, Safaricom’s shares have risen by 45 percent amid strong foreign investor buying and a favorable market outlook.

Investors are racing to be on the telco’s book ahead of August 30 deadline for paying dividend of KSh0.97 a share from the financial year ended March.

Last December the firm paid out a total of Sh1.44 a share in dividends, of which 76 cents were for the year ending March 2016 and 68 cents in form of a special dividend.

“Earnings margin improvement and reduced capital expenditure intensity are expected to sustain generous dividend payments going forward,” said Dyer & Blair Investment Bank head of research Linet Muriungi in a coverage note on the mobile operator last week.

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The firm has been paying out about 80 per cent of its net earnings as dividends, an attractive prospect for investors in a market where a rising number of firms are cutting back on retained income.

Higher earnings at Safaricom have been driven by growth in Internet and its M-Pesa mobile phone-based payments business.

Analysts have been upgrading Safaricom’s fair value as its price goes up, with Dyer & Blair issuing it a one-year target price of $0.26 (KSh26.75).

It remains to be seen, however, whether the company’s earnings will grow at a pace to justify the lofty valuations.

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