Safaricom says regulator decision will restore confidence

Safaricom has welcomed the decision by the Communications Authority to drop a proposal that would have seen its business operations split.

The telecom operator says the move is bound to restore confidence in the company especially with its shareholders, after weeks of the firm’s share price declining.

Safaricom chief executive officer Bob Collymore said the firm has had to engage its shareholders and customers to keep them calm, adding the decision not to split its operations will strengthen its performance going forward.

“The share value has dropped by about Sh160 billion since rumors of this report came out. And as we speak to shareholders there are concerned about a few things,” Mr Collymore said in an interview with a local TV station.

“Having seen their investments in the banking sector dive the way they did after the interest rate capping bill, facing an election year……… they are now wondering whether this proposed regulation is healthy for their investment,” he added.

Safaricom’s share price has rallied from Sh16.85 last week to hit Sh18 at the close of Wednesday’s trading session.

On Tuesday, the Communications Authority ruled the possibility of acting on a recommendation by Anlysys Manson to split Safaricom’s M-Pesa business from its voice and data business.

The Ministry of ICT has also hinted at a possibility of shared services in the telecom industry to boost competition.

Mr Collymore at the same time hit out at the firm’s competitors, faulting them for lack of investment in growing their networks and instead looking for legislation to that could restrain Safaricom’s growth.

“Why did the other players who have been around who have been around, for all cases, longer than Safaricom. When we first came in Kencell had the license at the same time as us. Why is it that we have continued to invest and they have chosen not to invest? Like I keep saying its like asking Rudisha (David) to carry failing competitors on his back,” he stressed.

The report on dominance in the telecom sector is set to be released in mid May.