From grass to grace – The Safaricom Story

It’s the month of June, the year 2000.

Michael Joseph, a former chief technical officer at Vodafone Hungary ; had just landed in Kenya to assume the role of Chief Executive Officer of Safaricom –   a new telco company that had been hived off from the then state-owned Telkom Kenya back in 1997.

Nobody else wanted the Job, not especially in Kenya – where Vodafone had little knowledge of the real market conditions on the ground.

Despite this, and with only seventeen thousand not-so-happy customers inherited from Telkom Kenya, Michael Joseph had to assure his employer that he knew what he was doing.

In a market previously dominated by such fierce competitors as Telkom Kenya, Goliath was suffering while David was thriving. Joseph’s advantage was that he had an instinctive empathy for the Kenyan Customer and with it, he introduced a raft of customer-centric strategies that bore juicy fruit.

For instance, in addition to reducing the price of a SIM card, Safaricom introduced per-second billing – while this may sound like small potatoes, Per-second billing was indeed a big deal especially for ordinary Kenyans who earned peanuts every month. Per-second billing meant an opportunity to save on costs.

In addition to this, and unlike his rivals, Joseph preferred the pay-as-you-go model where ordinary customers paid for airtime in advance and therefore did not pose a credit risk to the operator, although they would spend much less than their wealthier counterparts.

Joseph was, however, betting on economies of scale and by the end of 2001, Safaricom’s customer base had grown in upwards of 300,000 subscribers.

“Back in the year 2000, we started our operations with an investment of only 25 million dollars, most of our decisions were largely based on instincts,” says Michael Joseph.

By 2004, the same year that Safaricom introduced mobile internet, the Telco’s annual revenues had hit the 5 billion mark and its customer-centric techniques had earned it nearly 2 million subscribers, essentially cementing its new position. There was a new sheriff in town.   

But it was the launch of MPESA in 2007 that made all the difference, morphing Safaricom to become the most profitable and innovative company in the East and Central African region.

The GSMA certified International Mobile Money Transfer Service is today the most successful scheme of its type on earth and has helped put Kenya on the map, lubricating the lives of its citizens and lifting millions more from the jaws of poverty by deepening financial access even for the unbanked populace.

The following year, the telco pumped in another 2.4 billion dollars into its investment coffers after concluding the largest IPO in East Africa – in June 2008.  The ownership of Safaricom was now spread to over 750,000 individual shareholders.

“In 2010, I got bored, I wanted to step down,” Joseph Says.

“After a two-year selection process we settled on Bob Collymore and despite what naysayers said, I believed in Bob”, He added.

Michael and the late Safaricom CEO have now been credited with turning the company from a start-up into one of the most profitable firms in the region, boasting annual revenues in excess of one billion dollars and generating return on equities of double-digit percentage points – therefore rewarding its shareholders with dazzling wealth, while at the same time sustaining thousands of jobs in this country.

This year alone, the telco is ploughing through Ksh 38 billion to upgrade its 4G network, which it hopes will have covered at least 90 percent of the population by next year, according to its latest sustainability report.

Network upgrade remains the most capital-intensive exercise for any mobile operator.

Safaricom Milestones

The telco is also involved in a Communications Authority of Kenya (CA) program under the Universal Service Fund (USF). The program incentivizes mobile operators to put up base stations in marginalized areas that do not make financial sense. So far Safaricom has deployed 30 of such base stations in Kapedo, Baragoi, and Kajiado among other areas.

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Telkom Kenya has also added twelve of its own. Suspiciously missing on the USF list, however, is Airtel Kenya.  

Local herdsmen at Enkutoto village in Narok County making calls. Behind them, is in an imposing telecoms mast put up by Safaricom as part of CA’s (USF) program

In September this year, Safaricom is said to have written a letter to CA raising some concerns it wants addressed after Airtel and Telkom announced a planned merger.

The planned merger between Airtel & Telkom has since been frozen after anti-corruption sleuths flagged discrepancies in a previous deal by Telkom Kenya.

“Today Safaricom is big, it’s profitable, it’s innovative. But today, we want to start again on a clean sheet of paper, we want to be simple, transparent and honest with our customers, we want to be part of our customer’s lives” Said Michael Joseph, who returned to the helm in July on interim basis after the demise of Bob Collymore who succumbed to a rare type of blood cancer.

“We need to continue doing this if we are to continue walking on this path of greatness, we want to change the way we do business with our customers,” he said.

“Data bundles that do not expire is one of such ways. Going forward, our customers will also be able to buy their data bundles and Voice plans for any amount they so wish – it’s no longer pre-set, they will also enjoy fifty percent extra for any amount of airtime they purchase” Michael added.

He was speaking at a colorful launch party on the 23rd of October, where the telco was celebrating its 19th year in business.


Special Read: Everyone small business may require a financial lift at some point. Perhaps a small bank loan or maybe an overdraft would come in handy, but in a country where a majority of Small businesses remain unbanked, Read how Safaricom’s Fuliza is availing overdraft even to the unbanked folks.

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