Safaricom, the largest, (acknowledged) most profitable company in Kenya has returned a profit of Kshs 17 billion ($250 million) for the year ended in March 2007 – 40% better than the year before. What are the seven deadly sins again? I just want a decenet election year IPO.
there is no way that a company operating under abject poverty can report a whooping profit of 17.0 million without doing some underground mischeviousness,probably overcharging the already overcharged tax payers!
Beatrice,
I quite disagree with your notion that a company cannot be profitable in an environment like Kenya.
I believe that Safaricom has done more to help the poor (large tax payment to government & creating employment directly and via trickle down effect (cell phone dealers, simu za jamii etc) than hurt them.
It is simply a matter of Safaricom taking advantage of a market need for effective communication network and being efficient in its management and delivery of the service.
Bankelele – do you have any info on the IPO?
Beatrice, just be happy that yet more good news are rolling out Kenya and this shows you can as a co make serious bucks in Kenya/Africa.
The downside-from my pt of view- is that this probably means that its more likely they’ll be floating some of the IPO shares abroad.
Beatrice: true profit from enabling people to access relationships and business opportunities. and how do you define poverty?
3N: agreed there are many multi-national companies making profits in Kenya and Sub-saharan. Safaricom and Barclays are just the most visible (and listed) ones here. No news on IPO, but I predict by year end
MainaT: Safaricom is so profitable that we have to be caregul not to become greedy. We want it to be listed here, we also want it to be cross-listed on the LSE to introduce a kenyan shares abroad.
3N: First time I have heard “effective communication and efficien management and delivery of service” and Safaricom mentioned in the same context.
But on a serious note it is definately a worthy ivestment but I fear that it will be overpriced due to expectation.
I believe they have about 12 million subscribers. That is about KSH100 profit a month from each subscriber on average.
In my opinion, they have alot of room to grow. If your duka had 12 million customers imagine what you could sell them.
Banks, if Kimunya was clever, he’d list@NSE this year (get exemption so he won’t have to list the full 25%) and then offload an additional bit abroad sometime next yr-assuming he is back in office.The Kenyan bit won’t need any marketing and also he can have a much better idea of what price to do abroad.
Its not greed-ok a little.
If they took their time to build up their capacity in terms of service quality and implemented good systems they would make astronomical profits AND have satisfied customers.
Right now most people are on safaricom because their friends/family/workmates are on the same.
One can see how the company makes as much dosh,given the number of times you top up a day,even whilst on holiday.
Their subscriber count as of march 31st was 6.5 million and not 12m like don mentioned. I see regional mergers happening once it goes public-they might buy large stakes in UG and TZ mobile operators in a bid to compete with celtels regional coverage of E Africa. profit levels will likely drop if they embark on this venture, not to mention ongoing price wars with celtel in an effort to increase subscriber base and loyalty.
m – you are right about using Safaricom because all our friends and relatives are on it. You can even call it vendor lock-in.
This velocity will continue to reap profits for Safaricom. However remember their strategies have been spot on, by focusing on the common mwananchi they have managed to ensnare all of us.
This IPO will be like a piranha feeding frenzy.
Revenue = kes 47 Billlion
Customers = 6.5 M
Revenue per customer = kes 7,230 per year or kes 600 per month
Beatrice:
I think that one reason that Safaricom is so successful is that instead of doing what many of the continent’s other providers like celtel and MTN have done, they have chosen to dig their roots deep. They have focused so intensely on the Kenyan market that I would venture to say that they must have at least 35 to 40 percent of the Kenyan mobile market to themselves. Also, it is worthy to note that the market will pay what the market will bear. If anything though, they are probably helping to reduce the mobile costs in the region.
On the cost reduction note-the test of time will come when the other providers take note of how despite the per capita GDP in Kenya, someone is reaping more than handsome returns from the industry and then these other bigger players swoop in on the market.
Even still, I think Safaricom is here to stay!
Kirima: I think the company has by and large satisifed its main customers – prepaid
don: I think they see over 16 million subscribers in Kenya
MainaT: You’re right, Kenya was be an easy sale, with straight forward marketing
m: It seems that data, post paid and corporates have not been their ‘satisfied’ customers. I considered a swith to Celtel early thsi year, but my 5 year history with one line was a difficult bond to break. But if too many cosuins continue to hassle me for money, I’ll make Celtel my main line
Michael: It’s the same with petrol & driving now. But if you top up/fule a larger amount, you may find it goes a longer way than many smaller payments
sambaza: The nummer of subscrinbers is only an estimate. How active are the lines as revenue sources is more important
B.K.Muthoga: Celtel is chipping away at Vendor lock in by making the cost to call all networks. Bring on the IPO
alexcia: big numbers indeed
benin mwangi: safaricom will be a case study for multinationals for many years.
Are any of Safaricom’s senior manager’s Kenyan. The CEO, CFO seemed to be British
@mainat
As part of the deal with Tkl during formation of Safaricom, Vodafone insisted on having management control (since they had the lesser share and were dishing more money) so the CEO & CFO were seconded from Vodafone. Other chiefs are Kenyans.
@Banks
Most telecom analysts see profitability trends in GSM all the way to 2012-2015 (regardless of competition). IPO will be more than welcomed by all at this point in time. Cross listing would be better still for higher profile of the Kenyan economy.
mainat, I thought MJ & his colleagues were mainly South African?
Profit:
(i)Overcharging, if course. I was in Kenya recently and was shocked at the cost per minute of calls. even with my supposedly strong dollars, i felt it.
(ii) prepaid in US is about 10c/minute (or the equivalent of 6 shillings per minute). Obvioulsy, Kenyans being poorer, are getting charged 600% what the richer folks elsewhere pay!! Same trend in data products. I read recently that Africans pay 900% more on data products than the rest of the world.
Now, whose problem is this?
Guys Safaricom is a rip off,admit it.Where else in the world can a CO MAKE more profits than several banks together?we nd serious compe to safcom,apart from the IPO of course.
How do u post a comment as OTHER on this Blog??? Wots Web Page?? I alwayz hav problems n hence opt 4 ononymous…. Banks can u do sth?? Couldnt even locate the send button till now!!?
47 Billion, they are just getting started. All safaricom has to do now is provide new products and services, then sit back and watch the money rolling in.
M-pesa is gearing up, how much do you think they will make from that over the next year. And they are planning on making m-pesa available to the diaspora (Now that is a KSH 1 billion market right off the bat).
I predict profits up again at least 30% and they will not even break a sweat
On an add on safaricom ,It,s my feeling that they did there best, Companies that take care of there bottomline,constantly refine there marketing and management processes,serve the customer, and are managed well will , eventually win in the market place,i really hope, Safaricom will do an IPO locally,
Phil
NYC.
@beatrice:
One of the many lessons of International Business 101:
Countries are not poor because they have no money (wealth). They are poor because of the ‘(90) Rule’: less than 10% of the population owns more than 90% of the wealth. And they’re not sharing it with their own people. Re: Kenya
“Abject Poverty” would be the ‘(90) Rule’ AND no intrinsic wealth in a country!
Sijuicom’s (and Africa’s) mobile data services are expensive because the telecomm companies haven’t scaled up their infrastructure to offer services at lower cost. And don’t hold your breath that they will do this anytime soon. People are just happy enough to make highly convenient local calls for less than landline, and to have marginal savings/shockingly convenience for long-distance, that there is still plenty of capital to soak up in the voice market before expanding data services.
Here in the US the telecomms are dragging their feet on newer mobile techs and services because they don’t believe they can make any large margins on them. To be fair, I think they’re right. Here, mobile data services are still niche markets, particularly text messaging and especially Blackberry/RIM. Telecomms make more money from ringtones than any other service.
banks
please double check your profit number on safaricom. There’s no way in hell that can be right!