Safaricom succession: Filling Collymore’s shoes an uphill task


(Left-Right) Safaricom Chief Financial Officer, Sateesh Kamath, Safaricom Chief Executive Officer, Bob Collymore and Safaricom ...
(Left-Right) Safaricom Chief Financial Officer, Sateesh Kamath, Safaricom Chief Executive Officer, Bob Collymore and Safaricom Board Chairman, Nicholas Nga’nga after the announcement of the company's full year financial results at the Michael Joseph Centre.

In Summary

  • Market share is perhaps the sore thumb in Bob's 9-year reign at the helm.
  •   Safaricom may be losing its hold of the market, depicted most recently by the subsequent loss of the subscriptions share across 2018.
  •   Airtel and Telkom had eaten into the telco leader's pie.

Safaricom’s Board has remained mum on the appointment of a new Chief Executive Officer despite Bob Collymore announcing intentions to step down.

During the company’s investor briefing on Friday, May 3, 2019, there was no statement indicating who will take over from Collymore.

The Government however insists that it has to be a Kenyan; Collymore is a British national but was born and raised in Guyana.

The appointment of a new chief executive for Safaricom may be routine in the corporate world but at the country’s top telco, the task ahead is easier said than done given the stakes in play.

Pressure will lie with the new appointee who will have the unenviable role of equaling or eclipsing his/her predecessor-the corporate titan in Bob Collymore.

Having taken over from Michael Joseph– an equally formidable leader– in November of 2010, Mr. Collymore was tasked with scaling up the company.

“More than anything has been the ability to assess the Kenyan market and read it very intuitively after Michael Joseph. What you see today in the special dividend payout is a culmination of his nine years at the helm,” Aly-Khan Satchu, a top stock market trader said told Citizen Digital.

INCREASED DIVIDEND PAYOUT

Collymore’s tenure at Safaricom has extended beyond what may seem sentimental, to be heavily backed by an exemplary performance.

He ensured that the firm’s continued hold on the Kenyan telco sector and return on investments for shareholders.

At the start of his now nearly nine-year tenure, Collymore was tasked with expanding the firm’s M-Pesa services by increasing on the infant’s product offering and consolidating on the company’s fixed and mobile data growth.

Safaricom had at this time a total of 15.79 million customers, and a service revenue of Ksh.83.96 billion having just paid out a dividend of Ksh.8 billion.

M-Pesa users stood at 9.48 million with a total of 17,652 agents.

A year into his tenure, the firm paid out an increased dividend pay-out of Ksh.8.8 billion as revenues rose by 14 percent to Ksh.107 billion while both subscribers and Mpesa agents soared.

M-Pesa revenue was up to Ksh.16.9 billion as registered users on the platform rose to 14.9 million with mobile and fixed data revenues rising to Ksh.6.59 billion.

Fast forward to eight years later, service revenue sits at Ksh.240.3 billion with M-Pesa rivaling voice to contribute to 31.2 percent of the company’s earnings.

The mobile-money transfer service further has a total of 31.8 million 90-day active customers and data has transcended beyond the third generation network as the firm’s 4G network coverage surpasses the 50 percent mark.

MARKET SHARE

Market share is perhaps the sore thumb in Bob’s 9-year reign at the helm.

Safaricom may be losing its hold of the market, depicted most recently by the subsequent loss of the subscriptions share across 2018.

Having opened his term with a 78.3 percent market share, Safaricom’s slice of subscriptions has reduced to 63.3 percent as at December last year.

Airtel and Telkom had eaten into the telco leader’s pie.

In February this year, the two rivals signed a binding agreement to merge operations with the aim of upsetting Safaricom’s market leadership.

Upon the completion of the merger, they may have 32.4 percent market share represented by 16 million subscribers.

FULIZA AND M-SHWARI

Analysts term the performance of Bob Collymore as simply a key pressure point for the next office holder.

Collymore’s successor does however have a vantage point, going by the firm’s heavy capital deployment into product diversity and differentiation which keeps the company ahead of its peers in the telco sector.

To diversify revenues from its traditional voice, data and person to person (P2P) mobile-money transfer, Safaricom has in the past seven years launched M-Shwari, Lipa na M-Pesa, Mkesho.

In partnership with the Kenya Commercial Bank and the Commercial Bank of Africa, Safaricom also launched KCB M-Pesa and M-Pesa’s overdraft service- Fuliza.

“The DNA of Safaricom is what supports the firm, they are very big on innovation, research and product development. Of course not all products deliver but if they keep churning out new innovations, over time, one of the products catches on,” said John Nderi, manager, corporate finance and advisory at ABC Capital.

SUCCESSION JITTERS

While speaking to Citizen Digital in what was likely his last one-on-one interview as Safaricom CEO, Bob Collymore downplayed any jitters in regards to his succession.

“We’ve got a strong team. It’s taken quite a lot of work to build what you see today. I was sick for nine months last year and the team managed the situation quite well. I am proud of that,” the Safaricom boss said.

“I’d like my successor to focus on the role Safaricom plays in society. We are not a company that puts profits first despite some of the numbers you see today. We are a company that places purpose first. Whoever takes the company over the long-term has to understand and focus on that,” he added.

Safaricom remains the most profitable firm in the region continuously paying out a greater dividend to shareholders since its listing in June 2008.

At the Nairobi Securities Exchange (NSE), Safaricom commands a market capitalisation of Ksh.1.1 trillion as at the close of March 2019, a cap nearly eight times larger than the next highly financed firm.

Safaricom similarly holds the largest share of market spoils at the end of the first quarter of the year at Ksh.5.08 billion out of a Ksh.14.8 billion total market turnover.

Moreover, the firm’ share price has since listing soared by close to 600 times rising by an average of 30 percent in the first three months of 2019 alone.

 

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