Safaricom’s share price has dropped 30%, the highest since issued in June. The Chief Executive of the mobile operator said its recovery depends on stable world markets.
According to Reuters, Kenya’s most profitable firm first saw its share price soar 50 per cent, then drop precipitously, to Sh3.50 ($0.043) on Thursday from its Sh5 issue price.
That move shocked investors and dragged down the Nairobi bourse, whose main index has dropped 33 per cent this year.
“I think it’s going to take some time before we see the share price return to what it should be,” Chief Executive Michael Joseph told Reuters. “We’ll have to wait for stability to return to world stock markets.”
He said those selling the stock were not local retail and institutional investors but international hedge funds.
“It is quite sad, particularly for our retail investors who borrowed money.”
The Kenyan government, which wanted as many Kenyans as possible to hold the stock when pricing it, sold a 25 per cent stake in Safaricom in the region’s largest IPO in June. Britain’s Vodafone leads a consortium which has a 40 per cent stake in the firm.
Joseph said the global economic woes would impact business in general in Kenya, but that the mobile industry was somewhat immune to the problems.
“Most of our customers are Kenyans — the man on the street type person who won’t necessarily be much impacted.”
Joseph expected half year financial results, to be announced early next month, to be much better than the same period in 2007.
Annual pretax profit came in at 19.9 billion shillings for the year ended March 31, which was a 16 percent rise on the previous year.
The company has more than 12 million customers in a country of 36 million, Joseph said. The firm has over 80 per cent market share.
