What is really wrong with Safaricom shares? It continues to be the most traded counter in the NSE but the prices remain below the IPO level ever since.
I have been following the fiasco unfolding at the Social Networking site Facebook following the IPO, and you get the feeling that the bubble is busting around here. Facebook IPO has followed the path similar to what happened after Safaricom IPO. The different is that people have doubts on Facebook ability to make money online while in the local settings, Safaricom is the most profitable company in East Africa in the last three years or so. On the latest Financial Report for the year ended March 31 2012, Safaricom posted Sh12.6 billion in profit after tax. If you look at the market dynamics, they somehow all point towards more profitability in the future. For example MPESA is near monopoly in the Kenyan market at the moment, and it is expected to be even more dominant in the future, Safaricom still controls over 60 of voice market and had the highest net gain of subscribers in the latest CCK report for the last quarter. On top of that Safaricom controls over 80 percent of the data market which is predicted to be the next best thing for the telcos and ISPs
All that leave you wondering why Safaricom shares have traded below IPO price of five shillings since. In the past one year the share has touched a high of Sh4.05 …
Then there is the story on the Business Daily where the employees of Safaricom have stayed away from participating in an employee share ownership plan. The problem is the pre-determined price of Ksh.5.40 for the 100 million shares to be bought by employees under the plan. Clearly it would be insane for the employees to buy the shares at Ksh.5.40 while the market price at the moment is just above Ksh.3 but then you ask yourself if Safaricom employees do not believe on the Safaricom shares who will?