Safaricom’s top managers asked to apply afresh for jobs

Mobile telecoms operator Safaricom has asked 13 senior executives to apply afresh for the firm’s top jobs, taking the reorganisation plan that chief executive Bob Collymore announced last week to the next level.

In what marked his first show of hand since taking over leadership of the company from Michael Joseph in November last year, Mr Collymore has merged key business units and created new departments – meaning that not all executives holding C-level positions can fit in the new structure.

Mr Collymore has cut down the number of C-level (or managers whose titles begin with the word “chief”) positions that are direct reports to the CEO from 13 to nine. He has also done away with the title “chief” for senior managers, turning them into directors.

“The purpose of this re-design is not to downsize or retrench staff but to have in place a structure that will support the delivery of our business strategy in a rapidly changing and increasingly competitive business environment,” said Mr Collymore in a three-page e-mail sent to staff. “We also have an opportunity to ensure that we have the right people in the right roles,” he said.

Sources within Safaricom said the chief officers were on Thursday asked to reapply for the vacant directorship positions that must be filled before April 1. 

It was not clear what whether the company will deploy senior executives who fail to get directorships to lower level positions or retire them.

“The 13 managers have been asked to reapply for the available positions and we will know our fate by the end of this month,” said one of the executives who cannot be named because of the delicate nature of the matter.

Reorganisation of Safaricom’s operations is the culmination of a major strategy and business review plan that Mr Collymore initiated in December, aiming for a lean executive team with fewer reporting layers that can support the company’s growth in an increasingly competitive market.

Mr Collymore took over the leadership mantle in the second half of last year as Safaricom’s rivals stepped up the war for marketshare with deep tariff cuts and the regulatory landscape shifted rapidly putting the firm’s profits under threat.

Safaricom’s marketshare dropped to 75.9 per cent in October from 80.7 per cent in June. Airtel, which is Safaricom’s main rival, grew its marketshare to 13.5 per cent from 9.1 per cent during the same period.

It remains to be seen what impact the price wars that cut subscribers’ monthly airtime budgets by nearly half have had on the company’s profits.

Under Safaricom’s new management structure, procurement, finance and investor relations have been merged into one position as has been IT and technical officer’s roles.

Marketing, commercial and customer care have also been merged into a single position while the legal and communication functions will now fall one the care of one director. 

Mr Collymore has also created new divisions such as enterprise business, consumer business and financial services — that will run as profit centers, a pointer to the fact that Safaricom is looking beyond the competitive voice market for growth.

Under this structure, the popular money transfer service M-pesa falls under the financial services department.

The changes come at a time when a number of Kenyan firms including Equity Bank, East Africa Breweries Limited (EABL) and KCB have trimmed down their executive suites aiming to reduce overhead costs and the long chains of command.

“Firms are coming up with clearer individual roles that have greater and clearer responsibility,” said an analyst at African Alliance.

Price wars

For Safaricom, the changes are coming at a time when the company is facing the greatest risk to its profitability since it opened shop in 1999.

The firm has seen the bedrock of its business -- voice traffic -- shaken by price wars, and is now looking at data to maintain profits growth.

The cost of voice calls – that account for nearly 77 per cent of Safaricom’s revenues fell by 50 per cent in August to Sh3 per minute and consumers can now send short text messages at a rock-bottom price of Sh1, more than halving each subscriber’s monthly airtime budget.

The telecoms market landscape is set to tilt further from April 1 will the roll-out of a number portability regime that allows subscribers to take their existing numbers with them to rival networks.

This will see service quality, both customer and network, emerge as key marketshare and profit drivers now that the players have levelled out on pricing.

My Collymore said that a reorganized Safaricom will focus on marketing and technical functions to defend and grow its share of the voice business even as it seeks to reduce its reliance on that segment of the business as a profit and revenue driver.

The operator increasingly looking at the data business where it has acquired a number IT firms a business segment that will be supported by the new divisions—Enterprise and consumer business.