Safaricom's profit growth slows amidst political turmoil

(Adds more detail on EBIDTA growth)

By George Obulutsa

NAIROBI, Nov 3 (Reuters) - Safaricom, Kenya’s biggest mobile telecoms company, reported a sharp drop in profits growth on Friday, hit by a faltering economy partly disrupted by the political uncertainty.

The company, 35 percent owned by South African group Vodacom and 5 percent by Vodacom's majority shareholder Vodafone, also said Chief Executive Bob Collymore has taken leave to undergo "specialised medical treatment" which will take "a number of months".

In the financial half-year ended Sept. 30 earnings before interest, tax, depreciation and amortisation (EBITDA) rose 6.8 percent to 54.27 shillings ($524 million), which compared with a 30.8 percent rise to 50.81 billion shillings in the same period last year.

Adjusted for a one-off 3.4 billion shilling event in the first half of the financial year ended Sept. 30, underlying EBITDA growth was 14.4 percent, compared to 22.2 percent in the same period of the previous financial year.

"Kenya is going through a difficult macroeconomic situation, which is a reality which will affect Safaricom," said Chief (Taiwan OTC: 3345.TWO - news) Financial Officer, Sateesh Kamath.

The CFO, together with Joseph Ogutu, director for strategy and innovation, have taken over Collymore's responsibilities during his absence.

"We have a very strong and robust team and the only thing that may be lacking would be Bob (Shanghai: 601169.SS - news) 's presence and his overall image and stature," said Chairman Nicholas Ng'ang'a, who declined to comment further on Collymore's condition.

Kamath also said the company was maintaining its full-year profit forecast for earnings before interest and tax to rise to between 71 and 75 billion shillings, up from 67 billion shillings last time.

Last week the east African nation held a repeat presidential election after the Supreme Court nullified the results from an August poll on procedural grounds.

President Uhuru Kenyatta won the Oct (Shenzhen: 000069.SZ - news) . 26 contest with 98 percent of the vote after the opposition boycotted the election, saying it would be unfair.

On Friday the opposition called for Kenyans to boycott Safaricom because it had helped transmit results during the October election. A spokesman for the company declined to make any immediate comment.

Months of political uncertainty have damaged Kenya's economy, leading the government to downgrade the growth forecast for this year from 5.9 to 5.5 percent.

However growth has slowed but not stopped at Safaricom.

The company plans to launch an e-commerce service known as Masoko in mid-November, modelled on China's Alibaba (Berlin: AHLA.BE - news) , with the platform already offering 30,000 different products, Kamath said.

It also plans to increase the number of houses connected to its fibre broadband network by up to 60 percent in the next two quarters, from 100,000 currently.

Meanwhile first-half revenue from its mobile money transfer service, M-Pesa, rose 16 percent to 30 billion shillings, while revenue from phone calls rose by 3.6 percent to 47.35 billion shillings. Mobile internet service revenue was up by close to a third at 17.55 billion shillings.

Total (LSE: 524773.L - news) revenue rose to 114.43 billion shillings from 102.10 billion shillings in the same period last year.

Earnings per share for Safaricom, typically the most traded stock on the Nairobi Securities Exchange, rose to 0.65 shillings, from 0.60 shillings in the same period last year.

Safaricom's shares were up 2 percent at 25.75 shillings at 1220 GMT, taking the gain this year to over 34 percent.

In May Vodafone moved to consolidate two of its African interests with the sale of a 35 percent stake in Safaricom to Vodacom in exchange for an increased stake in Vodacom, where it was already majority owner. ($1 = 103.6000 Kenyan shillings) (editing by Katharine Houreld, Greg Mahlich)