Safaricom to seek up to $155m

Top Kenyan mobile phone operator Safaricom wants to borrow between Sh8 billion to Sh12 billion in the next few months to fund its expansion, its chief executive said.

"We should be coming to the market in two to three months for between Sh8 to Sh12 billion (Kenyan shillings)," Michael Joseph told Reuters on the sidelines of a mobile phone banking conference in Johannesburg.

Owned by Britain's Vodafone, the Kenyan government and a wide range of investors at the Nairobi bourse, Safaricom is banking on investments in the data parts of its business to fend off intensifying competition in voice services.

In March, its chief financial officer said Safaricom planned to raise the money only in the next 12-18 months, but Joseph said it would be "this year, for sure" .

With a 77 per cent share of Kenya's mobile phone market, Safaricom is way ahead of its competitors, but has had to contend with falling revenue per user as it has entered a price war with rivals such as France's Orange and Kuwait's Zain.

One weapon in Safaricom's armoury is its ground-breaking M-PESA mobile money transfer service, which has signed up 6.5 million customers in just two years of operation.

M-PESA, which relies on a network of 9,000 agents around the country, was shifting around $10 million a day and adding another 11,000 customers each day but was not yet making a profit, Joseph told the conference.

"It will become profitable on its own, but it's not there yet," he said, declining to give any indication of a targeted break-even date. "The costs to set up M-PESA are quite high."

Safaricom's share price has slumped to Sh2.8 compared to an offer piece of Sh5.00 as a result of the global market turbulence of the last year.

However, Joseph said much of the decline was attributable to international investors pulling out their money in response to a diminished appetite for emerging market risk.

Domestic individual investors were staying put, he said.