- Safaricom will be looking to upgrade the capabilities of M-Pesa to include buying insurance and investing in wealth management, a move that would put the firm in direct competition with Insurers.
- At present, M-Pesa allows users to send money, save, borrow and pay for goods and services via their mobile phone.
- The performance of the segment improved by 19.2 percent to account for 31.2 percent of the company’s revenue of Sh240.3 billion.
Peter Ndegwa is Wednesday set to take over as Chief Executive Officer at Safaricom #ticker:SCOM to succeed Bob Collymore, who died of cancer on July 1, last year, a move that will make him the first Kenyan to run the giant telco.
He will be taking over from founding CEO Michael Joseph, who has been holding the position in an acting capacity since.
Mr Ndegwa, an alumnus of Starehe Boys Centre and former East African Breweries #ticker:EABL finance director, will be betting on M-Pesa, data business and Safaricom’s likely entry into Ethiopia to shape the leading telephone services company’s growth in profitability.
The 51-year-old incoming CEO takes the reins at a time when businesses have been hard hit by the coronavirus global pandemic, meaning that he might have to work from home on his first day. But he was upbeat about the task ahead of him, seeing both the challenges and opportunities that the pandemic presents.
“It is time to serve my country. There are two things that I value most, and that is humility and integrity. Integrity is about doing what you say and humility is knowing that there is always something more you can do,” said Mr Ndegwa, an economist and accountant who has just returned from climbing Mount Kilimanjaro as he prepared to take over the corner office at Safaricom’s Waiyaki Way headquarters.
In both the medium and long-term, the father of one, who is married to Jemimah Ndegwa, will have to define his strategy for the company’s offerings, such as M-Pesa, which has emerged as Safaricom’s profit and sales driver in recent years in the face of sluggish growth in voice revenues. The company has been shedding market share in voice to its top rival, Airtel Kenya, which is in merger talks with Telkom Kenya, the third-largest player in the mobile phones services market.
Mr Ndegwa told the Business Daily on Tuesday that his strategy will hinge on M-Pesa and deepening the data business.
“Safaricom is more than just a telecommunications company. Voice is saturated but that what is happening everywhere in the world. Best companies renew themselves,” he said. He added that there are still great opportunities in data, M-Pesa and geographical expansion at a time when Safaricom has announced plans to enter Ethiopia, which is keen to liberalise its telecommunication services.
Safaricom will be looking to upgrade the capabilities of M-Pesa to include buying insurance and investing in wealth management, a move that would put the firm in direct competition with Insurers.
At present, M-Pesa allows users to send money, save, borrow and pay for goods and services via their mobile phone.
The performance of the segment improved by 19.2 percent to account for 31.2 percent of the company’s revenue of Sh240.3 billion. This was a significant growth considering that M-Pesa accounted for 23.3 percent of Safaricom’s annual revenue three years earlier.
The segment is like to grow and account for more than half and the firm’s revenue in the foreseeable future. This explains why Mr Ndegwa has trained his sights on strengthening the M-Pesa offering.
Reduced economic activity
The growth of M-Pesa helped offset a sharp slowdown in the growth of Safaricom’s data business and voice, which grew 0.17 percent.
In the short term, the company is likely to take a hit from the government directive to waive transaction costs on mobile money transfers under Sh1,000 as part of broad efforts to promote cashless payments to curb the spread of coronavirus.
Reduced economic activity following restrictions like night curfew and shutdown of bars, night clubs and restaurants is also expected to hit cashless transactions as well as airtime purchases.
On data, Mr Ndegwa will be seeking to deepen Safaricom’s interest in healthcare, agriculture and education by providing Internet-based solutions.
“Learning from home (during the coronavirus outbreak) has created opportunities in education through e-learning,” he said yesterday. “We are also looking at how innovation can help us deliver services in healthcare and agriculture.”
And he has a simple personal mantra.
“I like getting things done. The best strategy is about solving the problems of our customers and this is part of my DNA. I also like things simple,” he said.
Once Mr Ndegwa takes over at the helm, Mr Joseph will now retreat to the board where he has been serving as a director.
The executive suite change comes at a period when Safaricom’s top rival Airtel Kenya, has sustained an aggressive hunt for subscribers, cutting Safaricom market share to 64.8 percent in December from 79.6 percent in June 2017.
Besides weathering this competition, Mr Ndegwa is expected to shepherd the firm’s entry into Ethiopia, where Safaricom plans to bid for one of two telecoms licences later this year in partnership with South Africa’s Vodacom, which owns 35 percent of Safaricom.
Safaricom hopes to replicate its Kenyan success in the neighbouring country which offers a huge protected market with a population of more than 100 million.
Ethiopian officials plan to award two telecoms licences to multinational mobile companies in coming months as it opens up its market to foreign investors. Ethio Telecom, the State monopoly, has also taken steps towards offering a minority stake to a strategic investor.
“There is enormous potential still for Safaricom and I have no doubt that the new CEO will recognise this and take the necessary decisions to achieve this,” said Mr Joseph.