Why Safaricom no longer sees itself as a telecoms company

Safaricom chief executive Bob Collymore. PHOTO | SALATON NJAU

What you need to know:

  • CEO Bob Collymore gives a glimpse of the diversification and innovation plan that is weaning his firm off the mobile business.

It has become increasingly clear that Safaricom is no longer comfortable sticking solely to the telecommunications business since the successful launch of its mobile money business, M-Pesa.

The foray into financial services became the company’s key to retaining and attracting new customers.

Safaricom has ventured even further with diversifications meant to boost the company’s growth trajectory in the past few years, including investments in health and transport business.

The Business Daily had an interview with the company’s chief executive, Bob Collymore, moments after last week’s announcement of a 32 per cent rise in after-tax profit for the first half of the year.

You have been diversifying quite a bit from your core business in the past few years. When will we stop calling you a telecoms company? Are you taking cues from companies like Alphabet that seem to be moving into virtually everything?

We don’t want to become a company for everything, we want to become a platform for everything. And in fact we’ve even moved on from using the word platform.

We now use the word raft because platform is something which sits still. A raft is something which moves. And the world that we’re in today is moving at a particularly rapid pace.

So we want to be the raft that people can climb onto to get them where they want to go. We have stopped thinking about mobile phone companies being our competitors.

We don’t want to think of ourselves as a telecommunications company. In fact pretty much every Friday afternoon I interview incomers to the company and we hardly get any with telecommunications background now. They’re coming from all sorts of other backgrounds.

Can we expect to see a change in the company’s structure, perhaps with the establishment of a holding company along the lines of Alphabet?

At this stage you should not expect to see anything different about our operations. But as time goes by, the landscape changes. As I said, we are on a raft and the raft is moving pretty fast.

So next year at a time like this, we might be having a different kind of conversation. But at this stage there are no plans.

One of the latest ways you’re diversifying is through the establishment of an innovation hub. Could you give us more details on this?

There are two parts to the story about innovation. The first one is the Spark Fund through which we’ve set aside $1 million to put in start-up or early-stage companies.

We’ve spent about $800,000 so we have about $200,000 to go. There are a couple of projects that we’re looking at and we’ll make that decision probably in the next week or two.

The second part of this story is that we’re setting up an innovation hub, something which is separate from the core business that we’ve got here.

You’ve heard some criticism, which I think is quite justified, that we can be quite difficult to work with. It is very difficult to get new innovation ideas accepted. The Application Programming Interfaces (APIs) for M-Pesa is not the most elegant.

So we need to get a new mindset. A much faster, a much more agile mindset. And we’re in the process of recruiting some people to work in that innovation space.

We want more people to plug into our systems, to plug into M-Pesa. We want to see more interoperability on M-Pesa, you know we’ve been criticised in the past.

So the innovation hub is focusing specifically on improving what you’re already providing or to move on to the next M-Pesa, so to say?

We are going to have three large focus areas. And one of those areas is going to be agriculture because we think that ICT can play a big role in shifting the agriculture story. The second is going to be health.

We’re already doing quite a bit on health with the products M-Tiba and Leap, but we think that we really want to accelerate how ICT and telecommunications can change the health story.

And then the third one, we are thinking of trying to enable small traders to operate better, to transform their businesses.

But even as you move into these new areas, how do you intend to stay at the top of the mobile money transaction business?

We don’t start by wanting to stay on top. We start by wanting to be relevant. Providing that we’re relevant, I think that’s all that matters. Our strategy is to make sure we understand the customers. Deep, deep insight into customers.

You’re currently piloting a Lipa na M-Pesa payment card. When can we expect it to go national?

We’re running the pilot now with students. There are lessons to be learnt around usage, acceptability and things like that. So we’ve just launched the pilot and we’ll see how it goes.

We don’t have a date as of now. If the pilot shows us that the market is not there, we might not do it.

The M-Pesa ecosystem is still missing a link in terms of international e-commerce. Customers can’t go to the Apple shop, for instance, and buy something on M-Pesa. What are your plans to address that link?

We will close that gap. I can’t give the time frame at the moment but the team is working on helping us to do online purchases via M-Pesa. I mean it is an obvious thing to do.

Are we just concentrating on the local e-commerce ecosysestms or are we also looking international?

We’re working with international partners.

Who are you working with?

That we’ll tell you when the time is right.

The Communications Authority of Kenya is carrying out a study on your role as a dominant market player. How are you preparing yourselves for a scenario where you’re declared dominant?

The best way to deal with dominance is to just disconnect 10 million customers, and then we’re no longer dominant. But that doesn’t make any sense.

What we’re doing is having ourselves independently assessed on our behaviour because it’s not about size. What you have to make sure is that you’re operating to good, solid ethical standards.

So there is no abuse of that dominance. The independent assessor will look at our business segment by segment, we will respond to the recommendations and fix any arising problems.

Still on matters of regulation, what is Safaricom’s stance on net-neutrality in Kenya?

Net neutrality is something that has been playing out in some of the big markets. It’s not an issue here yet. We don’t do any throttling on the Internet, so whatever you want to use the network for, you use it.

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