Safaricom’s success year on year is the result of an obsession with its customers
The founders of Safaricom were an ambitious bunch.
From an initial investment of only USD 25 Million and with only 17,000 not-so-happy customers inherited from Telkom Kenya 19years ago, the company has morphed into the largest & most profitable business in Eastern Africa – controlling half of the capitalization of the NSE at a whooping Sh1.14 trillion in value for shareholders.
The telco’s market value is now Sh1.25 trillion, almost all the money Kenya Revenue Authority (KRA) collects in a year’s tax, it’s the best employer, biggest taxpayer and continues to weave itself into daily Kenyan lives.
But success of this magnitude hasn’t been handed to it on a Silver Platter, in hindsight; 2019 alone will go down as one that has tested Safaricom’s legendary resolve.
In addition to navigating an effort to split the company into two (GSM & M-PESA), Safaricom lost its long-serving CEO, Mr. Bob Collymore, to a rare form of blood cancer on the morning of July 1st 2019.
During his time, the late CEO pioneered a buffet of Customer-centric strategies that steered the telco into nearly a decade of innovative expansion.
He pioneered an e-commerce platform, a digital music studio, an agribusiness platform designed for Smallholder farmers, home fiber connections and he pioneered a payments platforms on which multiple Kenyan innovators automatically relied on to process their backend financial transactions.
The GSMA certified mobile money system is today one of the most successful mobile money schemes in the world and partnered with Global titans including, PayPal, Western Union to facilitate international money transfer and China’s anti finance to facilitate seamless e-commerce payments between Merchants and shoppers globally.
The success of M-PESA as a global mobile money system is solid evidence that Safaricom as a company – has come of age to command the strictly controlled international financial markets.
Earlier this year, before his untimely demise, Bob Collymore pioneered the introduction of the world’s first mobile overdraft facility dubbed Fuliza. Built on top of M-PESA , Fuliza allows customers and small businesses to make payments even when they have insufficient balances.
Within the first six months, Fuliza had lent out a whopping Ksh 85 Billion, a clear indication of a credit-starved market in the wake on interest rate caps.
Fuliza is now set to line the performance of M-PESA revenues as well as competition dynamics that secures M-PESA revenues going forward.
But Safaricom is not a one-man show, rather, its success over the years has ensued through constantly disrupting itself to address the concerns of its customers, outside of just making calls.
The appointment of Mr. Peter Ndegwa, the first Kenyan to head the telco and especially one who has spent considerable time selling products to consumers, is seen as a strategic move by the telco to claim its identity with the Kenyan consumer.
This year, FKE named Safaricom the best employer of 2019, in a list that also contained BAT and electricity generator Ken Gen. The telco was recognized for Inclusiveness & Diversity – where it achieved a 50:50 gender parity on its payroll and Effective Human Resource & Industrial relations practices.
Even in the tough year ending March 2019, Safaricom’s net profit grew by 14.7 percent to Sh63.4 billion on the back of total revenue growing by 7.1 percent to Sh250.96 billion, revenue from voice, M-Pesa, mobile data, and fixed service.
This year also tested the survival of Nairobi’s stocks market, hit by risk-averse foreigners selling off frontier markets, low corporate earnings and rate cap handicap.
For retail and foreign investors this was a sell and flee market. Year to date foreign buying was at $9.65 million as of October 2019, with foreign portfolio investors at 15 percent of market cap, below historical highs of 30 percent.
But for institutional investors like pensioners who are required by law to keep some money in equities, the bourse offered a great challenge. How to invest in counters that withstood the decline like Safaricom.
Hence even in a tough year, the company became a safe bet and it helped protect the wealth of investors exposed to the Nairobi bourse.
Now, as the Company matures past it teen age, it Pioneer and Current CEO Mr. Michael Joseph wants to steer it through a business model, moving the giant telco from a mobile service producer to a digital channel for the future.
Joseph says that by placing emphasis on transparency, experiences (over things) and flexibility – for instance; removing the expiry date for data bundles, and 50% extra airtime for every amount topped up, Safaricom will have deepened the roots of its core purpose to transform the lives and lively hoods of its people.
“We need to continue doing this if we are to continue walking on the path of greatness, we want to change the way we do business with our customers,” Said Michael Joseph during the Telco’s 19th birthday celebration.
These customer-centric moves will essentially position it as not just a company after profits but an organization that listens to its constituency.
In 2019 alone, Safaricom pumped Ksh 38 Billion to upgrade its 4G network with a plan to have covered at least 90 percent of the country’s population in the New Year.
Network upgrade remains the most capital-intensive exercise for any mobile operator.
Meanwhile, Safaricom is entering 2020 in an interesting pitch. First, CEO Michael Joseph Says that competition is good for his company as it will force Safaricom to flex its innovative culture, it will be interesting to watch how the planned Airtel-Telkom merger will pan out.
The telco will also be eating into banking territory after it launched a pilot product dubbed ‘Mali’ targeting savings & Money markets. However, Mali is still in its early testing phase and will be subject to relevant regulatory approvals.
The other is the Pan-African dream through a planned entry into Ethiopia that received regulatory backing in November. This move will essentially set the stage for another episode of innovation and transformation of lives beyond its mother country.
