Safaricom share defies change of guard to remain firm

Safaricom’s share price remained unchanged following the announcement of chief executive Michael Joseph’s exit from the company in November, a signal of investor confidence in the firm’s performance.

The firm announced on Thursday that Mr Joseph would be passing the leadership baton to Bob Collymore, heightening uncertainty over how investors would react to Kenya’s most critical executive transition.

But Safaricom’s share price was little unchanged, dropping 0.87 per cent to Sh5.65 at the close of trading at the Nairobi Stock Exchange (NSE) on Friday — a pointer that investors were little troubled by the transmission.

“It shows that investors don’t expect Safaricom growth strategies to change and therefore there is no cause for alarm,” Johnson Nderi of Suntra Investment Bank says.

Dealers at Standard Investment Bank say that there was no significant change in demand and supply for the counter despite reduced volume from Thursday’s 3.9 million to Friday’s three million shares traded.

Dealers say the reduction in demand was expected and it was not a reaction to the news of Mr Joseph’s exit.

But the full impact of investors’ reaction to the transition will emerge this week as the market continues to absorb the news.

In an earlier interview, Mr Joseph said that Safaricom started planning for his exit last year.

In May he said his departure, could be delayed due to factors related to maintaining investor confidence in the company.

“What I would like and what may be good for the company at this time are two different things. Nonetheless, the succession plan is in place,” he said.

Mr Joseph who started out as a telecommunications technician over 40 years ago has steered the company to new heights, with the firm’s shares now accounting for more than half of those traded each day at the NSE.

Most successful firm

Under him Safaricom rose to become East Africa’s largest and most successful firm in terms of earnings — from a struggling enterprise that only had 17,000 customers, an outdated network, and a huge cash deficit.

Safaricom officially launched its operations in Kenya in 2000 with Vodafone pumping in $20 million.

It was also under his helm that Safaricom gave birth to M-Pesa money transfer service which has transformed finance in the country, giving Kenya the enviable position as the world’s most innovative country in mobile telecommunications.