The share price of Safaricom hit a new record high this week to trade at Sh35 as positive sentiment following the lifting of free M-Pesa transactions and expectations of successful entry into Ethiopian market came to bear.

Yesterday, Safaricom had two million shares valued at Sh73 million transacted at between Sh34.60 and Sh35.05 which represented 55.93 per cent of the day’s traded value.

This helped lift the company’s market valuation to Sh1.4 trillion — an amount close to Kenya Revenue Authority’s total collection last year – which pushed the telco’s market cap at the Nairobi Securities Exchange (NSE) to a whopping 61 per cent of the entire market valuation.

The increased demand in Safaricom’s stock has lifted the entire NSE to a market capitalisation of Sh2.4 trillion, which is way above the pre-Covid era.

CBK waivers

It comes on the back of the telco’s shares having surged by seven per cent since mid-December, as the Central Bank of Kenya (CBK) continued to activate emergency waivers for mobile money transactions, which expired on December 31.

The waivers were part of the government grand plans to cushion Kenyans from pandemic shocks when the first case of Covid-19 was registered in Kenya in March.

The relief was to encourage the use of digital money over cash transactions in response to the virus attack.

Safaricom said it was losing an average of Sh1.8 billion a month in June, thanks to the free transactions for consumers sending up to Sh1,000.

It is estimated that this move cost the telco Sh16.2 billion in revenues by the end of last year.

Fibre connections grew rapidly during the pandemic making the company market leader for home internet.

Kestrel Capital researchers say demand is coming from foreign investors keen to gain on anticipation gain if the tleco purchases a license as Ethiopia opens its telecoms sector.

“The money transfer advantage could see Safaricom gain entry especially if their fundraising initiatives go through,” said the researcher although the company’s research team is not allowed to speak to media.

This increased demand in Safaricom’s stock has lifted the entire NSE to a market capitalisation of Sh2.4 trillion, which is way above the pre-Covid era.

The company’s share was trading at Sh5 a piece at the beginning of 2013, meaning that the firm was then valued at Sh200 billion at the time.