We have extracted the Chairman’s Statement from 2019 annual report for Safaricom Limited (SCOM.ke), listed on the Nairobi Securities Exchange:
Last year was a challenging one for businesses around the country. Despite reported positive economic growth, consumer wallets remained under pressure, forcing Kenyans to make tougher spending decisions every day.
This lower discretionary spending, coupled with increased tax demands as the Government sought to raise more funds from the ICT sub-sector, contributed towards the plateauing in growth of a number of services including voice and messaging. Despite this, the service industry continued to register sturdy performance, supported by the growth of businesses such as ours in ICT, as well as wholesale and retail trade, transport, tourism and real estate.
Sustaining Growth Through Supportive Regulation
As mobile penetration has deepened to reach close to 51 million subscribers in a country of about 52 million, so has the need to find alternative means of sustaining growth. Traditional growth drivers (voice and messaging) continue plateauing, pointing to the urgency of reinventing our business to meet changing consumer needs. This will require more calculated investment and innovation, both of which can only succeed in a supportive regulatory environment.
We have noted with concern, attempts to regulate the industry through proposed legislation and regulations that seek to forcefully reorganise the operating structure of companies such as ours, whose growth has been the result of well-executed business strategy. Such actions would severely limit the ability of businesses to invest, innovate and transform lives, which is what Safaricom exists to do. It is our hope that this matter will be handled in a more consultative manner, including meaningful discussions between all concerned parties in order to come to a more considered outcome, that’s beneficial to all stakeholders.
Welcoming Competition Kenya is a dynamic market, with enough room for multiple players to compete fairly in the pursuit of business growth and brand love. It is therefore encouraging to see the competition landscape changing, owing to the ongoing merger between two market players. We believe this will result in greater innovation and efficiencies for the benefit of customers. Safaricom welcomes fair competition on a fair playing ground, where investment, strategy, innovation and brand promise are the true differentiators; as opposed to the use of regulatory support as a means to success.
Connecting People, Transforming Lives
Over the last 18 years, Safaricom has built a business founded on our innate desire to transform lives using mobile technology. We have been able to do this by focusing on our strategy, continuously anticipating the needs of our customers and innovating to meet them and staying true to our purpose. However, none of this would have been possible without your unwavering belief in our vision. So on behalf of the Board of Directors, I would like to say, thank you. Your patience, loyalty and support inspire us to do more: to seek out new growth opportunities that will generate considerable shareholder wealth, and deliver shared value to a broader stakeholder base.
We began Q2 FY2020 on a sad note following the passing of our CEO, Mr. Bob Collymore, on 1st July, 2019 after a long battle with cancer. He was a remarkable man who had an extraordinary dream for the world and for Safaricom. For nine years, Mr. Collymore led our business to achieve notable milestones, including significantly increasing shareholder value and instilling in us a sense of purpose that has become the hallmark of what we do at Safaricom. This purpose, to transform lives, is the reason we exist today. To honour his legacy, we will remain committed to completing the work he began. We will stay true to our purpose and to using mobile technology to make life better for Kenyans and as many people as we can reach across the world.
Although our business is up against a number of challenges, we are confident in our ability to manage these risks and ensure continued growth, guided by a very able Executive Committee now headed by Mr. Michael Joseph, who was appointed as the interim CEO by the Board of Directors.
Looking ahead, we will continue to reinvent our business, invest in new areas of growth and realign our priorities to position Safaricom as a business that is fit for the future.