Collymore awaits Safaricom board nod over job contractMonday March 23 2015
Safaricom chief executive Bob Collymore has not heard from the company’s board of directors about the renewal of his employment contract, which expires in four months’ time.
Mr Collymore’s contract ends in August, having been extended for two years in 2013. There is a strong expectation it will be renewed again in the absence of any overt succession planning.
The Safaricom boss took over from founding CEO Michael Joseph in August 2010, and has seen the telecommunications company grow into a regional giant by profitability, balance sheet size and stock market capitalisation.
“The Board has not made any decisions on any renewal of the CEO contract which expires in August 2015,” said Mr Collymore in an email response to a query by the Business Daily. “There are no other directors whose contracts are coming up for renewal,” he added.
He started his tenure at the height of a vicious price war that lasted until September 2011, an experience that saw him put more emphasis on growth of the telco’s non-voice revenue with a special focus on M-Pesa and data business.
The market value of the Nairobi Securities Exchange-listed telco has soared to a record Sh630 billion from the range of about Sh300 billion it was valued at less than two years ago.
Pre-tax profit under Collymore has increased to Sh34.9 billion in the year ended March 2014 from Sh20.97 billion in the year ended March 2010 before he took over.
Safaricom’s revenue has also grown to Sh144.6 billion as at the year ended March 2014 from Sh94.8 billion in March 2011.
Mr Collymore’s tenure has also seen Safaricom’s voice customers grow to 21.5 million as at the last financial year from 17.1 million customers in the year ended 2011.
Its M-Pesa clients have also grown to 12.1 million from 7.7 million in year ended March 2011, while mobile data customers increased to 9.5 million from 3.4 million customers in the period.
READ: Safaricom sets new record as market value hits Sh630bn
Some of the notable innovations launched during Collymore’s tenure is the M-Shwari product in partnership with Commercial Bank of Africa. M-Shwari offers customers a platform to save money on their mobile phones and later borrow loans that are repayable within a month.
CBA has advanced loans amounting to Sh29 billion, up from Sh7 billion in February last year. Early last month CBA announced that it had signed up its tenth million customer, making it Kenya’s biggest bank by customer numbers.
Recently Safaricom, in partnership with KCB, launched a mobile phone-based loan borrowing service for amounts repayable at a fixed interest rate of between four and 12 per cent.
KCB M-Pesa gives Safaricom customers access to loans of between Sh50 and Sh1 million repayable for between one and six months.
If the board renews Mr Collymore’s contract or hires another CEO, the immediate challenge will be to deal with regulatory changes intended to introduce stringent rules for investigating abuse of dominance in the telecommunications and broadcasting market.
The Communications Authority of Kenya (CA) has proposed a set of 11 regulations meant to come into force by mid-June, including a Fair Competition and Equality of Treatment clause that empowers the CA to automatically declare any telecommunication firm with a market share of more than 50 per cent as dominant.
Safaricom has said in previous interviews that these new regulations are aimed at punishing the market leader before establishing whether it is actually abusing it market dominance.
But the CA has defended this move saying it is in line with the quest to align the existing law to the Kenya Communication Amendment Act 2013 and the Constitution.
READ: CA seeks powers to reduce Safaricom’s market share
If gazetted, the proposed regulations that are now subject to public input will require an operator who has been declared dominant to seek the CA’s authority before increasing or reducing tariffs.
The current law only requires such authorisation for proposed tariffs increment. Current regulations also require all licensees to run separate accounts for each segment of their business — a rule that will now only apply to players who have been declared dominant.
Safaricom started as a department of Kenya Posts & Telecommunications Corp., a state-owned monopoly that was later split into different entities.
The mobile-phone department was set up in 1993 based on an analogue network that was upgraded to GSM technology in 1996.
Safaricom was incorporated in April 1997, awarded its operating license in 1999 and began commercial operations in October 2000.
The telco competes with Telkom Kenya Ltd. a unit of France Telecom and India’s Bharti Airtel. Early this year the firm completed a joint buyout of the fourth mobile operator in Kenya, Essar Telecom Kenya Ltd that was owned by Essar Group of India and trading under yuMobile.