Internet firm share rides high amid good profit [Nation (Kenya)]

(Nation (Kenya) Via Acquire Media NewsEdge) Increased investor demand triggered by the release of impressive annual results saw AccessKenya's share price rise at the Nairobi bourse, becoming the best-performing counter this year.

The Internet Service Provider's stock has risen by over 60 per cent since January as investors continue to reward the counter following a successful turnaround that saw the company move from loss-making to positive territory.

Analysts at Standard Investment Bank (SIB) said the company has overcome the challenges it experienced in 2010 and 2011, which saw it suffer Sh7.9 million and Sh109 million losses respectively.

Its net earnings grew by 39 per cent in the year ended December 2012 to Sh151 million, compared to Sh109 million reported in a similar period in 2011.

"Whereas the ISP business has struggled somewhat in 2010 and 2011, we continue to see an improved visibility in earnings as the company positions itself for new wholesale business, new value-added services propositions, and the traditional corporate date business," SIB analysts said in their weekly market report.

The counter is expected to continue rising, driven by increasing investor demand.

"In the short-term, we expect speculative trading to support the counter. We expect it to hold steady at some level before picking up again," Afrika Investment Bank (AIB) market analyst Ronald Lugalia said on the phone.

The company would also resume payment of Sh0.30 dividend per share to its shareholders after a three-year drought.

The data provider's after-tax profits rose by 39 per cent in the 2012 financial year supported by increased connections and a firming grip on the corporate market segment.Increased Internet subscriptions The firm's chief executive, Mr Jonathan Somen, attributed the improved performance to a significant increase in Internet subscriptions, a highly robust and reliable network, and strong customer service that has spurred customer growth.

"Our leased line connections are up by 700 customers to 5,400 total leased lines," said Mr Somen. The data firm has in the past year invested nearly Sh400 million in infrastructure upgrades, migrating customers in Nairobi and Mombasa to its Metropolitan Fibre Network.

The company is also converting its wireless base stations to fibre backhauls in order to increase delivery capacity, even as competition from other firms like Safaricom, Telkom Kenya, Wananchi, Jamii Telecom, and Kenya Data Networks continues to gather pace.

Wananchi has a 34 per cent market share, Access Kenya 17.7 per cent, Telkom Kenya 16.7 per cent, while Safaricom enjoys a 10.2 per cent market share, according to Communications Commission of Kenya statistics.

"Competition is coming up from all sides, but their strategy would now be to focus on the corporates and also on the middle-income earners," said Mr Lugalia.

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