Kenya’s telecom giant Safaricom has insisted it will stick to its generous 80% dividend payout policy even as it raises fresh debt through a landmark green bond to fund sustainability projects and growth in Ethiopia.
The company opened subscription for a KSh15 billion tax-exempt green bond on Tuesday, the first slice of a KSh40 billion medium-term note programme. The five-year paper carries a fixed 10.4% coupon and comes with a greenshoe option that could push the tranche to KSh20 billion if oversubscribed.
Dividend policy stays intact
Finance director Dilip Pal told journalists the new borrowing will not dent shareholder returns. “No, it doesn’t change our dividend policy. Our net debt to EBITDA is not changing much, so we remain at 80% of net income after adjusting for minority interest,” Pal said.
Safaricom has paid KSh48 billion in dividends every year for the past three financial years, making it one of the most rewarding counters on the Nairobi Securities Exchange and a key driver of its share price.
At the end of March 2025, total borrowings stood at KSh107 billion — KSh64.7 billion long-term and KSh42.6 billion short-term. The fresh bond will push gross debt above KSh130 billion.
Part of the proceeds will refinance a costlier KSh30 billion syndicated loan taken from four local banks, while the rest will fund green projects in Kenya and Ethiopia.
Solar-powered network and 5G rollout
The bond money will bankroll initiatives under Safaricom’s five-pillar sustainability framework: energy efficiency, renewable energy, green buildings, pollution prevention, and sustainable land and resource management.
Key projects include shifting base stations to solar power, expanding 5G coverage, and replacing a 25-year-old legacy network.
Of the 7,000 mobile sites countrywide, 1,400 already run on solar panels backed by batteries that last up to four hours. Kenya Power is now the third power source after solar and batteries, with diesel generators used only as a last resort.
“Network operating cost is the largest cost for any telco, and energy accounts for 50% of that spend,” Pal noted. Network opex hit KSh24.1 billion in the year to March 2025, implying annual energy bills exceed KSh10 billion.
Data centres are also being migrated to solar and fitted with energy-saving systems.
Half-year profits jump 52.1%
The debt-funded investments come against a backdrop of strong financial performance. Safaricom posted a 52.1% rise in half-year net profit to KSh42.7 billion for the six months ended September, up from KSh28.1 billion a year earlier.
Service revenue grew 11.1% to KSh199.9 billion, led by a 14% surge in M-Pesa revenue to KSh88.1 billion. The mobile money unit is on course to contribute half of total revenue.
Losses in Ethiopia narrowed 59% to KSh15.2 billion from KSh19.4 billion, delivering a KSh4.2 billion positive swing to the group bottom line.
Since entering Ethiopia in 2022, Safaricom has invested over 300 billion birr (about $2.5 billion). The unit now covers 55% of the population with 4G through 3,306 sites and had 10 million active customers as of July.
Investor appeal remains strong
Analysts say the combination of steady high dividends, exposure to Ethiopia’s growth story, and ESG credentials continues to make Safaricom attractive to both local and foreign investors.
The board is expected to declare an interim dividend in February, maintaining the 80% payout ratio that has become a hallmark of the company.
