Category Archives: vodafone

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.

Safaricom Governance Changes

Appearing in today’s newspaper was a notice for the Safaricom shareholders annual general meeting (AGM) that will take place on September 1. In addition to the usual shareholder resolutions, there are additional matters that will be approved, mainly relating to governance by at Safaricom. This all follows the buyout of UK’s Vodafone stake in Safaricom, by South African Vodacom in an internal Vodafone group corporate realignment earlier this year that has now been completed.  A running theme seems to be entrench Kenyan citizens in the governance and influence at what is now Kenya’s most valuable company.

Some of the changes:

  • The company Chairman shall be a Kenyan (this is now going to be mandatory and is spelled out in the company’s articles of association)
  • Directors shall encourage retention of a “Kenyan character” in the senior management and executive committees of Safaricom.
  • The articles are also changed to spell out that that independent non-executive directors of Safaricom, shall all be Kenyan citizens.
  • The position of Deputy Chairman is eliminated.
  • Directors appointed by Vodafone shall be excluded from voting on agreements relating to M-Pesa.
  • Directors appointed by Vodafone are to vote in the interest of the company (Safaricom) if its growth and investment decision clash with those of Vodafone.
  • Directors shall appoint the Managing Director Previously as indicated in documents from the Safaricom IPO, Vodafone directors had veto power over the appointment over approval of business plans, annual budgets, the appointment of the Managing Director (Chief Executive Officer) and appointment of the Financial Director (Chief Financial Officer). Now, the Safaricom articles will change to read that “75% directors must approve these provisions” including a new one of “any material change to the company brand”. Shareholders at the AGM will also approve a name change of the company to “Safaricom PLC” in compliance with Kenya’s new companies law for listed companies to be “PLC”

Huawei in Kenya

Huawei Kenya held a media briefing at their Kenya headquarters near Lavington. This was refreshing as last year when they were to do a demonstration of the Nairobi Smart Cities project; they scaled it down as soon as they heard the Cabinet Secretary was not going to show up for the event.

Huawei has been operating in Kenya for 19 years since 1998. They have done lots of projects mainly in the telecommunications space; they rolled out networks for Safaricom and Telkom Kenya and also launched the Ideos, the $100 smartphone with Google and Safaricom.

The Huawei Kenya representatives spoke about ongoing projects with the government such as cloud services for the entire Kenya government, roll out of government fibre to all 47 counties, and police security & 4G networks. Since 2015 they also provide the software for M-Pesa for Vodafone to roll out across Africa and the world. They also provide about 2/3 of the infrastructure of Safaricom and also power M-Kopa solar payment systems.

Huawei is a $75 billion company with 180,000 employees (80,000 who work in R&D), and operate in 170 countries. It is entirely employee-owned by 81,000 employees in China while the founder/CEO owns  1.4% of the shares. They have 300 staff working in Kenya and provide about 100 scholarships a year for Kenyans to study in China.

In 2016, Huawei sold 139 million smartphones – (number three behind Apple and Samsung). They work hard to combat the reputation that Chinese means ‘low quality’ and Huawei is the world biggest patent filer, and have been granted over 62,000 patents. They spend over $10 billion a year in R&D – and build their own its own chipsets, batteries, and some phones have three antennas etc. to optimize their phones.

Vodacom buys Vodafone Stake at Safaricom

Early this morning a surprising news story first appeared at Bloomberg about Vodacom buying shares at Safaricom. Early interpretations of the story had the Kenya government selling their entire 35% of their most valuable investment to Vodacom.

But later, the official statement from Vodafone (and Safaricom) confirmed that Vodafone was the one selling 35% of their shareholding to Vodacom. It includes a statement by Safaricom CEO, Bob Collymore that the deal “promotes the continued successful expansion of the company as well as the opportunity to drive M-PESA to other markets in the continent.”

  • Safaricom had announced another record earnings year year, last week.
  • Will there be a rebrand to Vodacom? Safari com may be constrained by operating in Kenya. Vodacom just had an IPO in Tanzania whose outcome is pending and M-Pesa has had tremendous strides in Tanzania.
  •  Former Safaricom CEO Michael Joseph resigned from the Vodafone a month ago to concentrate on his role as Kenya Airways Chairman.
  • Vodafone will remain with 5% of Safaricom – down from 39.93%.

Safaricom Exceeds Earnings Expectations, Powered by M-Pesa and Data

At their Nairobi headquarters today, Kenya communications company, Safaricom announced another record year with the release of the Safaricom 2017 results, which CEO Bob Collymore credited to a focus on customers, innovative products and improving operations.

The company reported revenue of Kshs 204 billion (~$2 billion), an increase of 15% from the year before, and an astounding EBITDA of Kshs 103 billion ($1 billion), up from 83 billion in 2016. M-Pesa growth was 33% to Kshs 55 billion as the number of active M-Pesa customers increased to 19 million – who do an average of 10 transactions a month. The number of customers also went up 12% to 28.1 million.

Later, their CFO said the results came even as customers enjoyed lower costs of voice calls, SMS and money payments. Under “M-Pesa” Kadogo, the company waived M-Pesa tariffs for payments below Kshs 100 ($1) in a push to drive financial inclusion and this led to an 88% growth in transactions in that band.

Chairman Nicholas Nganga said that “Sustaining this growth is key to the Board” as he announced that the contract of Bob Collymore had been extended for an additional two years. Collymore, in turn, said that at a time when several Kenyan companies were announcing job losses, Safaricom had added 500 new jobs during the year and would be adding another 270 mainly in customer care.

Going forward, Safaricom will be changing their earning outlook from projecting EBITDA to projecting EBIT (earnings before interest & taxes) – and for 2018 they project EBIT to be between Kshs 71 to 75 billion after capital expenditure of between Kshs 35 and 38 billion that will be spent in 2017/18.

Following the release of the Safaricom 2017 results, their shareholders will get a dividend of Kshs 0.97 per share, equal to 80% of the profit, is an increase of 27% from 2016 – excluding the one-time bonus dividend paid out last year. The payment will total Kshs 38.8 billion, and 35% of that goes to the Kenya government as the second largest shareholder after Vodafone.