Safaricom now Africa’s tenth most valuable firm

Safaricom #ticker:SCOM has been ranked the 10th most valuable firm on the continent in a ranking dominated by South African companies.

South Africa-based African Business disclosed in a ranking of the continent’s top 250 firms that Safaricom had climbed from position 14 last year.

Only four Kenyan-based firms, including East African Breweries Limited (EABL) #ticker:EABL, Equity #ticker:EQTY and KCB Group #ticker:KCB, were ranked among the top 100 most valuable companies in Africa.

In the ranking, which is based on a firm’s market capitalisation at the end of March, Equity Bank was ranked at position 82, followed by EABL (90) and KCB Group (92).

Safaricom’s market value was placed at $9.96 billion (Sh1.06 trillion) compared to Sh12.74 trillion of South Africa’s technology firm Prosus—which is the continent’s most valuable firm.

The top seven most valuable firms are from South Africa, underlining its economic dominance in the continent on the back of its mining and financial sectors.

Safaricom and Morocco’s telecom giant, Maroc Telecom, were the only firms outside South Africa ranked in the top 10.

But the East African region is still the continent’s most attractive investment destination based on capital gains, according to the survey.

“Some of Africa’s most attractive investment destinations are found in the East. But this did not stop the region’s share of the Top 250 ranking falling from 21 companies totalling $26.3bn (four percent of total market cap) last year to 17 entries totalling $20.2bn (3.4 percent of the total) this year,” the report notes.

“South Africa’s share of the Top 250 Company ranking continues to slip back because other African markets have been growing more strongly – at least before the crisis hit. South Africa now has 100 companies on the list, down from 109 in 2019,” the report states.

Kenyan firms remain dominant in East Africa. Ugandan firms missed out in the top 100 ranking while Tanzania had two firms—Tanzania Breweries Limited at position 75 and Vodacom Tanzania (98).

Safaricom’s dominance of the Nairobi Securities Exchange (NSE) has hit a new peak after the telecommunication firm’s market valuation exceeded 50 percent of the Sh2.06 billion Nairobi bourse. Safaricom’s valuation of Sh1.1 trillion at close of trading Monday is now 53.3 percent of total investors’ wealth on the NSE Nairobi Securities Exchange, a factor that is largely attributable to the bear run that has precipitated a sharp drop in the market capitalisation of other listed firms.

Being above the 50 percent threshold means that Safaricom’s market worth is now more than the combined valuation of all the other 62 listed companies.

The firm is still shy of its highest-ever market capitalisation of Sh1.27 trillion it achieved in March 2018, but the company has avoided the deep erosion of value that other companies have suffered in the wake of coronavirus-driven losses, pulling down the benchmark NSE 20-Share Index to a 16-year low.

The telco’s share price has gained 1.3 percent over the past month to hit Sh27.65. The firm together with EABL, Equity and KCB Group, account for 80 percent of NSE firms’ valuation

The Capital Markets Authority (CMA) regularly flags the influence the top firms have in terms of traded activity and investor wealth as a market risk.

Safaricom’s net profit for the full year ended March this year jumped 19.54 percent to Sh74.7 billion on strong M-Pesa and mobile data revenue growth that offset a decline in voice and messaging (SMS) revenues.