Safaricom promises more innovation to build on its Sh74 billion profit

What you need to know:

Safaricom has been consistently growing profits for the last eight years, with the net earnings having grown nearly six times when compared with Ksh12.63 billion profit in 2012.

Safaricom is promising to retain its annual capital spending in rolling out new products and services to address evolving needs of society. This as it aims to build on its Ksh73.66 billion net profit.

The telco is preparing for its virtual annual general meeting (AGM) on July 31, when shareholders will get an opportunity to know the plans for the current financial year.

Safaricom’s net profit grew by 17.9 percent to Sh73.66 billion in the year ended March 2020 as it ushered in a new CEO, Peter Ndegwa, the first Kenyan to lead the business.

Mr Ndegwa says that consistent focus on investment in the company’s infrastructure and innovative platforms and services has been the key driver in strong performance over the year, a feat he wants to build on.

“We will continue to develop new digital products and services that solve societal challenges in agriculture, health, education and essential services,” says Mr Ndegwa.

“Leveraging the power of partnerships and our digital platforms, we will drive affordability and innovation in mobile communication, financial services and enterprise solutions, while maintaining our leadership in the best network handset.”

The telco has been automating internal and customer-facing operations and enhancing use of artificial intelligence, all which Mr Ndegwa will be taking to the next level.

Safaricom has been consistently growing profits for the last eight years, with the net earnings having grown nearly six times when compared with Sh12.63 billion profit in 2012.

The company’s capital expenditure has been averaging Sh36 billion to Sh40 billion, giving room for the company to roll out new products to deliver fresh revenue streams and retain an edge over its competitors.

The AGM is being held in the period of Covid-19, which has brought to the fore the importance of technology.

Safaricom will be seeking to amend its articles of association to allow for electronic AGM or a hybrid of electronic and physical meetings going forward.

This will eliminate the need for getting a special window to hold virtual meetings if it opts to. The current company Act does not have a clause on virtual meetings. Listed firms have to seek a special window for such meetings.

Shareholders will use the meeting to approve a final dividend of Sh1.40 per share, up from Sh1.25 per share paid in the previous year. The pay-out will amount to Sh56.09 billion, and will be disbursed by end of August.

“The board is committed to investing in the business and maintaining our strong record of paying progressive dividends each year,” states outgoing CEO Michael Joseph.

Safaricom has also taken bold steps to support customers enduring the economic strains of Covid-19 restrictions. Among the measures it took included allowing M-Pesa users to send up to Sh1,000 for free and ensuring a stable network and data services for the many people working from home.

“We have made some significant decisions in recent months to support customers and ensure Kenyans can spend their money where they need it most. Our current support is valued at Sh6.5 billion,” states the chairman, Nicholas Ng'ang'a.

Eyes will be on the new boss, Mr Ndegwa, as he steers the company through its growth path.

Mr Joseph handed the management reins to Mr Ndegwa in April, having launched a new customer proposition – “For You” – that promises “simple, transparent and honest” service.

He reckons that the proposition has already delivered improved customer sentiment, greater brand consideration and a gain in market share for the first time since 2017.

Mr Ndegwa says he wants to see many more businesses such as micro, small and medium-sized enterprises benefiting from the digital investments of the telco just as retail businesses have.

“Looking ahead, Safaricom has always been a pioneer and I am committed to continuing this path to tap into the vast opportunity,” says Mr Ndegwa.

The telco has been on the frontline in identifying innovations to improve on customer service delivery, and Mr Ndegwa is pledging to retain this in the next phase of growth.

“We will stay true to who we are to the society, both within Kenya and as we begin to expand out in the region.”

“We will continue to develop new digital products and services that solve societal challenges in agriculture, health, education and essential services,” Mr Peter Ndegwa, Safaricom CEO.