Category Archives: Safaricom

Barclays Timiza launched

On Friday, Barclays unveiled Timiza, its virtual banking strategy to extend its growth and services to the mobile space.

It comes after two other banks CBA (through M-Shwari) and KCB have also extended virtual services over Safaricom and M-Pesa to reach millions more digital customers and borrowers.

Timiza is immediately available to all M-Pesa customers (they are 27.8 million) who are either Barclays customers and non-customers. Timiza has a simple registration by dialing *848# or downloading the app from the google store and entering a national ID and phone number and within minutes of creating a new password, one can see their credit limit and start borrowing. The minimum loan amount is Kshs 50, and maximum Kshs 1 million, though it’s really up to 150,000 (~$1,500) depending on one’s credit rating and funds are immediately sent to one’s Timiza wallet (not M-pesa). For demonstration, a loan of Kshs 1,000 (~$10) for 30 days attracts a fee of 1.17% plus a facility fee of 5%, for a repayment of Kshs 1061.67

Besides being an easy and low-interest loan avenue, Timiza also offers a simple current account, savings account, fixed deposit account (term deposits of 1, 3, 6, 12 months – minimum Kshs 1,000. no top-up), group savings accounts, and channels for utility payments. One can also purchase insurance (a whole life cover policy) in the app.

A few months ago when M-Shwari was marking five years since its launch, CBA announced they would have variable pricing for good-repayers and a rebate on fees for people who paid loans within 10 days. These have not been done, but there are hints of such revisions in Timiza

Other Timiza Notes

The Timiza T&C‘s mostly relate to the use of personal information and clauses on resolving disputed. But they also have some interesting things:

  • There are no fees for transfers between Timiza and M-pesa
  • Barclays may suspend a Timiza account and credit if they discover it is being used for fraud or illegal activities, and they may also suspend them if they become aware that a customer is defaulting on other loans.
  • Unique from M-Shwari in that the loans can be rolled-over, and there will be a “roll-over” fee levied. However, the staff at Barclays branches have no authority to alter Timiza agreements. 
  • Timiza users will be eligible  for store finance at Barclays-selected merchants
  • One can select the period for repayment of a loan when applying for a loan  – maximum of 30 days

Barclays has 88 branches which are located in 38 of Kenya’s 47 counties and says they are responding to their customers preference for more mobile and internet banking channels. Barclays targets to get 5 million new customers in the next five years.

$1=Kshs 101

Regulatory hammer for Kenya telco reverses gains

Reading a version of a report (August 2017) on the telecommunication competition market study in Kenya by  Analysys Mason (AM) of London for the Communications Authority of Kenya presents some startling observations and unwieldy regulatory recommendations.

They regulatory target is the telco – Safaricom, which is the market leader in Kenya’s telecommunications and mobile money space. The reports documents areas where Safaricom is dominant as well as other telco spaces and areas where other companies like Telkom Kenya, Airtel, Wananchi, Equitel (from Equity Bank) and Multichoice (who were beyond the scope of the study) also dominate.

The AM report looks at the current state of the telecommunications sectors, but it ignores the reality of how it got to be where it is – the history of telecommunications in Kenya, strategic-decision-making, investment & management decisions, price wars, new technologies like mobile money and fibre cables etc.

Other studies have been done on the telco sector in Kenya by different agencies. In 2012 Citi did a report on Bharti Airtel (after Bharti-Airtel bought out Zain Africa in 15 countries for $10.7 billion in 2010) and at the time; It noted:

Safaricom is by far the largest operator, with a 65% market share. Bharti is a distant second with a 15% share. Safaricom’s dominance has come down from a  peak of ~80% a couple of years back as the smaller operators have become more aggressive.. while they both launched in 2000, Kencell (now Bharti) focused on the quality of network and high ARPU customers, Safaricom focused on the mass market. Also innovations like per-second billing, which Bharti took some time to introduce and M-PESA also helped  (Safaricom) cement its dominant market position and Safaricom’s stable management in contrast to Zain’s frequent management (1. Kencell 2. Celtel 3. Zain 4. Bharti) changes also helped it compete more effectively.

Kenya has other dominant players such as EABL (alcohol), BAT (cigarettes), Kengen (energy production) and Brookside (milk), but the Communications Authority (CA) is the only agency that can declare if there is a dominant telco market player.    

In the past, the CA  has pushed some changes to level the telco field such as rolling out number-portability, the ending of mobile money agent exclusivity, and the upcoming rollout of mobile money interoperability.  

But some AM report proposals are regressive such as at least five days before launching a new tariff, loyalty scheme or promotion, Safaricom should provide a justification that the proposals can be replicated by a reasonably efficient operator – AM or that Safaricom may not offer loyalty bonuses or promotions for which the qualification criteria require different levels of expenditure or usage by different subscribers in the same category – AM
The range and messaging of different Safaricom promotions like Tunukiwa, Bonga, Flex and now Platinum, is sometimes confusing but they should not be restricted from competing and innovating. Already, another investor report by Citi has already expressed concern about the impact on telcos of some of the regulatory recommendations in the AM report including that they may have effects that will be unclear, they do not foster innovation, and they may result in high prices. 

The AM report notes that there is some concern among investors in that, as Safaricom has maintained a high share of the market for many years and that recently Essar/Yu exited Kenya (2014), Orange sold out (to Helios who re-branded as Telkom-Kenya) and Bharti indicated that they may  also consider leaving Kenya, and perhaps other countries in Africa.

While appeasing investors is good, they have to contend with Safaricom and its impact on a telco regulator with targets, and to the Kenya government country as a significant taxpayer (Safaricom’s 2017 annual report cites payment of Kshs 84.3 billion in taxes and fees to the government, in addition to 35% of Kshs 57 billion dividends that was paid to shareholders)

Finally, Safaricom is a vertically-integrated company, and dominant players come and go and they evolve over time as market forces, customers, and technologies changes. The AM report notes the introduction of Pesalink, which can be seen as a reaction by the banking sector to M-Pesa, and it also cites the use of Equitel – on average, a Safaricom M-Pesa subscriber makes 6 transactions per month, whereas an Airtel Money subscriber makes 0.6 and an Orange Money subscriber makes 0.1. However, the average Equitel subscriber makes 10 transactions per month – AM. 

No one knows what the telco sector will look like in the next decade, but the consumers, not regulatory muscle, should be the decider.

NASA Post-Election Economic Boycott of Brookside, Bidco, Safaricom

Last week, Kenya’s opposition movement, the National Super Alliance (NASA), who boycotted the repeat presidential election held on October 26, announced an “economic liberation programme” and called on their followers to boycott the products of three companies Bidco, Brookside, and Safaricom.

What’s the link?

Brookside Dairies is associated with the family of President Uhuru Kenyatta. The company was started in 1993 and Brookside has grown to control about  44% of the processed milk market in the country, ahead of New KCC and Githunguri Dairies.

Brookside has acquired several dairy companies and still sells milk under their original brands including Tuzo, Molo Milk, Ilara and Delamere.  While the NASA statement mentions that when Jubilee took over milk farmers were getting Kshs 35 per litre while consumers paid Kshs 72 per litre, and that today farmers still get Kshs 35 while consumers pay 120 per litre, the economics of milk prices is a complex one, not attributed to the processor alone. Brookside collects milk from over 160,000 farmers every day.

Safari com: MP’s from the NASA side have  accused Safaricom, arguably Kenya’s most successful company, and some of its employees who they publicly named, of enabling  incorrect election results to be transmitted during the August 8 elections, something which the company has denied and also expressed concern that their employees had been needlessly endangered as they did their jobs and the company merely fulfilled a contract to support the 2017 Kenya general election.

NASA MP’s have gone ahead to public switch from using Safaricom to rival Airtel, even as Safaricom dealers warned of dire effects for their employees and communities.

Safaricom has 6 of its 45 shops in the Western/ Nyanza Region which is the bedrock of NASA support. Whether this is a turning  point for Airtel in Kenya as a company which has branded as Kencel, Celtel, and Zain and which has steadily lost ground and value to Safaricom over the years, remains to be seen.

But members of parliament from ODM (the main party in NASA)  have in the past voiced critical comments about some of their issues with Safaricom from even before the 2017 election –  especially during debate on the gambling and sport betting bills in the last parliament, earlier this year.

Here are some comments by Nicholas Gumbo, the then-Member of Parliament for Rarieda and Chairman of the Public Accounts Committee in the National Assembly.

Then-Member of Parliament for Gem and Deputy Minority Leader, Jakoyo Midiwo threatened on more than one occasion to introduce legislation to break Safaricom.

Bidco: The edible oils company is probably the most vulnerable of the three brands, and was likely targeted because its group chairman Vimal Shah, is the chairman of MKenya Daima an offshoot of the Kenya Private Sector Alliance (KEPSA), of which he’s a past Chairman, and which has throughout the election season been championing for respect of the election outcomes, grievances to be addressed in the constitutional ways (through the courts), for politicians to be careful about their public utterances and for normal business life to resume. KEPSA recently released a statement that read:

This is why we have consistently called Kenyans’ attention to the disastrous economic consequences of the present uncertainty which affects all Kenyans. The Private Sector having reviewed the loss and has estimated it to be about 10 per cent of the GDP equivalent to Kshs 700 Billion

Earlier this year, Bidco announced plans to become a billion dollar turnover (Kshs 103 billion) company by 2021 (their current turnover is Kshs 25 billion) by diversifying into the production of fruit juice, soft drinks, and cereal products.

Safaricom CEO Leave and Impact

Safaricom is not expected to undergo major changes or see much impact following the shock statement released this week about CEO Bob Collymore leaving the company for a few months to undergo medical treatment.

“During this time, Sateesh Kamath, the current Chief Financial Officer for Safaricom who is also Mr. Collymore’s alternate on the Board, will take a primary role.  He will be supported by Joseph Ogutu who is the current Director – Strategy and Innovation, Safaricom. Mr. Ogutu will be responsible for Safaricom’s day-to-day operations until Mr. Collymore’s return from medical leave.

Following the news about the CEO’s leave, the Safaricom CFO had a session with investors, and according to a Citi report afterwards on the implications of the events:

We have no concerns over operations of the company in the CEO’s absence. Based on examples in other geographies, it would take a couple of years to derail a well-run company.The company may become exposed on the regulatory side. We think the regulation is likely to remain balanced with consideration of the contribution the company makes to the state (in taxes and dividends)

The discussion about succession and its impact at Safaricom comes exactly seven years after Collymore took over from Michael Joseph as CEO. He then made his formal debut announcing the half-year results back then, and that event will recur again tomorrow (Friday) when Safaricom releases its 2018 half-year results. Also at the results announcement, updates will be given on the e-commerce plans and international expansion of the M-pesa platform.

CFO Kamath with CEO Collymore and Chairman Nganga at the Safariom 2017 results announcement in May.

At the announcement of another year of record 2017 financial results announcement in May this year, company chairman, Nicholas Nganga announced that the expiring contract of Collymore had been extended for another two years. No interim CEO will be appointed at Safaricom, Collymore came to Safaricom from Vodafone, but an appointment of a CEO is one of the governance clauses that changed with the Vodacom buyout of Vodafone’s interest in Safaricom in the middle of the year.

The Safaricom Sustainability Report for 2017 which Collymore launched a month ago, noted that the company’s shareholding had experienced a decline in local and retail shareholders due to their profit-taking from the company’s high share price and a corresponding increase in investment stakes of foreign corporate investors due to Safaricom’s performance and strong fundamentals.

Reading the Tea leaves at Centum, Kenya Airways, Safaricom – Part III

Following up from last year, three companies that had their year-end in March 2017 – Centum, Kenya Airways, and Safaricom have just published their annual reports. Later this month, they will all have shareholders annual general meetings – Safaricom’s will be on September 15, Kenya Airways, who already had an EGM will have their AGM on 22 September, while Centum’s will be on September 25th at Two Rivers, Nairobi.

Notes from the annual reports.


  • Has a massive 234-page annual report (up from 192 pages), and the company has 37,163 (last year 37,325) shareholders. 44 shareholders have more than 1 million shares.
  • Board changes at the AGM: New chairman Donald Kaberuka will meet shareholders, and this year Henry Njoroge Imtiaz Khan and Dr. James McFie all step down from the board.
  • Shareholders will also be asked to approve the incorporation of ten Ramani Arch companies as Vipingo subsidiaries, Rehati Holdings, Zahanati Holdings Greenblade Growers, and a Greenblade EPZ.
  • Centum will pay shareholders Kshs 1.2 per share dividend (up from 1.0 last year)
  • Had 86 billion assets. Profit was Kshs 1.5 billion for the year then added with other gains from value changes, this reached Kshs 6.1 billion.
  • Their auditors, PWC, flagged issues like loan impairment at Sidian, loans at Chase Bank, the value of unquoted assets, the value of goodwill, and the value of investment properties.

    Centum shareholders to meet at Two Rivers.

  • Centum has 35 billion worth of subsidiaries including Two Rivers Development (50% of lifestyle centre and 100% of water, ICT, apartments, and phase 2) , GenAfrica Asset Managers (73%), Almasi Beverages (52% of Investment holding company for Mount Kenya Bottlers, Kisii Bottlers and Rift Valley Bottlers), Bakki Holdco (Sidian Bank) and Vipingo Estates
    Associates: Centum sold off their entire 26.4% of KWAL (for Kshs 1.1 billion) while at Longhorn they raised their stake to 60%.
  • Unquoted investments include General Motors East Africa (GMEA – estimated Kshs 3 billion worth), Nas Servair (estimated Kshs 765 million) and Nabo. NAS, where they own 15% opened three Burger King restaurant franchise outlets in Kenya. Centum still owns 17.8% of GMEA after Isuzu bought a majority 57% stake from GM. They also own 25% of Platinum Credit that provides loans to civil servants and has 80,000 customers.
  • Their Lulu Field acquired 14,000 acres in Masindi Uganda for agriculture.
  • They own  27.6% of Nairobi Bottlers which accounts for 47% of the Coca Cola sold in Kenya.
  • In energy, they own 37% of Akira geothermal and 51% of Amu Power.
  • Managers earn more from performance bonuses than salaries.
  • They have borrowed Kshs 1.4 billion from Coca Cola Exports (for Almasi to buy crates and bottles), 3.1 billion from First Rand, Kshs 982 million from Cooperative Bank (for working capital), Kshs 573 million from Chase Bank (for infrastructure at Two Rivers and vehicles for Longhorn), and Kshs 440 million from KCB (for machinery at Mt. Kenya Bottlers)
  • They are owed Kshs 12 billion by related parties including 1.1 billion by Two Rivers Development, 3.1 billion by Centum Exotics, 3.3 billion from Centum development, 1.3 billion by Mvuke (Akira geothermal), 672 million at Vipingo Development and 533 million from Investpool Holdings.

Kenya Airways 

  • The report is 172 pages (up from 149 pages) and KQ has 79,753 shareholders (up from 78,577).
  • Going Concern: While their auditors KPMG have a material matter about KQ’s uncertainty as a going concern, the Directors have prepared the consolidated and company financial statements on a going concern basis since they are confident that the plans described above provide a reasonable expectation that the Group and Company will be able to meet their liabilities as and when they fall due and will have adequate resources to continue in operational existence for the foreseeable future. The Directors believe the plans above will improve the Group and Company’s profitability, cash flows and liquidity position. 
  • Sebastian Mikosz takes over as Group Managing Director & CEO, replacing Mbuvi Ngunze.
  • Tax treatment: the accumulated tax loss of Kshs 71 billion of Kenya Airways and Kshs 782 million of JamboJet will be carried forward for ten years and used to offset future taxable profits.
  • The fleet in 2017 had 39 aircraft down from 47. The board approved the sale of 6 aircraft, and 5 have since bene sold. Also, two Embraer 170’s were returned early to the lease owners while three Boeing 777-300 were leased for four years by KQ to Turkish Airlines with another two Boeing 787-800 leased to Oman Air for three years.
  • Borrowings Barclays Bank PLC – Aircraft loans 325 million at 4.87%, Citi/JP Morgan – Aircraft loans Kshs 71,649 million at 1.89%, African Export – Import Bank (Afrexim) – Aircraft Loans Kshs  21,050 million at 4.82%, and short-term facilities of 24,776 million at 8.58%, and Government of Kenya  24,540 million at 8.58%. The short term facilities were drawn down from Equity Bank, Jamii Bora Bank, Kenya Commercial Bank, Commercial Bank of Africa, I & M Bank, Chase bank, National Bank of Kenya, Diamond Trust Bank, Co-operative Bank, NIC bank and Ecobank for the financing of pre-delivery payments for ordered aircraft.
  • On Time Performance (“OTP”):  The top delays contributors were:1) Aircraft serviceability and availability;2) ATC restrictions and weather;3) Passenger and ramp handling;4) Crew shortage; and5) Connectivity due to new schedules with more efficient use of aircraft.
  • 13 incidents related to disruptive passengers/inappropriate behaviour were reported in 2016/17 financial year compared to 21 incidents reported in the prior year.
  • A total of 70 bird strikes were reported during the period under review compared to 63 cases in the prior year. Most of the reported bird strikes caused minimal damage to our aircraft, but several resulted in costly maintenance, parts replacement, and operational delays. These include two reported air turn back incidents and two rejected take-offs due to bird strikes.


  • The report is 144 pages (down from 172) and the company has 582,775 shareholders (down 600,000 shareholders last year and 660,000 the year before that).
  • At the AGM, shareholders will approve payment of a dividend of Kshs 0.97 per share (out of EPS of 1.21) – for a total dividend payout of almost Kshs 39 billion. Last year they paid Kshs 57 billion in dividends (35% of which went to the government to whom they also paid Kshs 84.3 billion in taxes and other fees).
  • Shareholders will approve a name change to Safaricom PLC. Also, they will vote on special board change resolutions following the Vodacom Vodafone deal; these  will mandate that the Chairman and all independent directors of Safaricom be Kenyan citizens, and also to require that a super-majority of the board (75% of directors) vote to approve changes to the business plans, appointments of the managing director and chief financial officer, and branding of the company – which previously Vodafone had a direct veto over.
  • Balance sheet of Kshs 108 billion down from 117 billion.
  • Bonga points (a loyalty scheme) now total  Kshs 3.3 billion (up from 3.2 billion) are a liability to be converted to revenue as customers utilize their points.
  • Safaricom also has deferred revenue of Kshs 3.4 billion from unused airtime and bundles (up from 2.7 billion) which include Kshs 243 million of managed services under the police contract.
  • For, the National Police Service communication project an amount of KShs7.5 billion was received during the year and the outstanding balance at the year-end was KShs4.47 billion.
  • The Group has short-term borrowing facilities with Commercial Bank of Africa, Standard Chartered Bank and Barclays Bank of Africa.
  • Safaricom has an active ESOP: 13.7 million shares historically valued at KShs193.2 million (2016: 30.4 million shares valued at KShs375.12 million) vested and were exercised by eligible staff.
  • Risks: their auditors, PWC, flagged  issues such as accuracy of revenue recognition, while
    Safaricom itself considers business risks including terror and cyber attacks, competition  (from companies like WhatsApp), the regulatory environment and weakened economic growth.
  • They have an Insider trading policy. Directors and staff are made aware that they ought not to trade in the company’s shares while in possession of any material insider information that is not available to the public or during a closed period.
  • Subsidiaries are One Communications, Instaconnect, Packet Stream Data Networks, Safaricom Money Transfer Services, East Africa Tower Company, IGO Wireless, Flexible Bandwidth Services, Comtec Training and Management Services, and Comtec Integration Systems – all 100& owned, while The East African Marines Systems Limited (TEAMS) is an associate company where they own 32.5%.
  • New products and innovations include Blaze, Flex and M-Pesa Kadogo under which they waived all charges for m-pesa transactions smaller than Kshs 100 ($1). 
  • Besides partnerships such as M-TIBA, Eneza and M-KOPA, they had others with women in technology, Little Cabs, athletics and music. Also, the Safaricom Spark Fund invested in six companies – Sendy, mSurvey, Eneza, Lynk, FarmDrive, and iProcure.
  • The company donated Kshs 381 million to the Safaricom foundation.
  • Twaweza – when we come together, great things happen– is the next phase of the Safaricom brand.