Here are the shares we will be closely watching in today’s trading at the Nairobi Securities Exchange:
- Safaricom – The board of the Communications Commission of Kenya (CCK) will today agree on whether to lower the Mobile Termination Rates (MTR) – the rates mobile operators charge each other for handling rival network calls – to either KES 1.44 or KES 1.60 from the current KES 2.21 (Business Daily). Safaricom has been against the Mobile Rate cut as it will reduce what rival networks pay them, as most mobile phone calls originate from Safaricom who have a 65 percent market share. In addition, Safaricom’s rival operators have chosen not to lower call rates with the lower MTR but instead absorb the bigger profitability margins. In light of this we will watch how the Safaricom share reacts to today’s MTR cut, as more profitable competitors could point to a greater challenge for Safaricom to maintain its dominant market share going forward. On the other hand a pledge by rival operators not to cut rates could guarantee Safaricom’s future earnings thus prop up the share. Since the start of last week, Safaricom has closed at KES 4.00 which is its highest range since January 2011.
- Centum Investments – Kenya’s largest investment firm has announced that is successfully raised 3.2 billion shillings through a private issuing of 5 year debt instruments which it will channel towards private equity and real-estate investments. CEO James Mworia has said on the firm’s website that the fixed cost of the debt makes it poised to boost shareholder returns and overall wealth over the 5 year horizon. Centum shares yesterday dropped 2.48 percent to close at the month’s lowest of KES 11.80. After a tumultuous year following June’s announcement of 64 percent lower profits for the year ended March, and a CMA fine for not issuing a profit warning on the same, Centum shares have moved from trading above KES 14 in the second quarter to a low of KES 11.40 late last month. We will watch if they rise today on news of the successful capital bid and accompanying shareholder prospects.