“We are committed to building a resilient and world class network infrastructure that will support our country’s economic development.”
MICHAEL JOSEPH
Chairman and Non-Executive Director
Safaricom PLC
As the Chairman of the Board, it is my pleasure to present to you our 10th Sustainable Business Report. The past year has been one of far-reaching changes and extraordinary circumstances. Key among these changes was the retirement of our long-serving Board Chairman Nicholas Ng’ang’a in July 2020. Nicholas served on the Safaricom Board for 16 years, 13 of them as chairman. I would like to pay tribute to Nicholas for dedicated service during his tenure in which he steered the business not only in achieving tremendous success, but also through some of the most difficult times through his astute leadership. While at the helm of the Board he oversaw the growth of shareholders value by 607% and market capitalization to KSh 1.075 trillion which is worth 50% of all the listed firms on the NSE. The other key achievements include growing our network coverage to every corner of Kenya, growing our customer base from six million to over 35 million and keeping the business focussed on its purpose through the integration of the Sustainable Development Goals into our business strategy. We remain committed to sustainability and the United Nations Sustainable Development Goals. The Board and I thank him for his unwavering commitment to Safaricom and wish him well in his retirement.
The other major leadership transition that took place was Peter Ndegwa joining us as the CEO at the start of the 2021 financial year, just after the government had imposed COVID-19 restrictions. This was very challenging; given that he couldn’t meet many of his colleagues face to face. Despite this, the Board is very pleased with how quickly he settled into the role and in particular how he has steered the business in responding to the COVID-19 crisis. Most importantly, I’m proud of the work Peter and the team have done in refocusing our business to the needs of our customers through the Customer Obsession journey which has solidified our market leadership position and our market share which stands at 64%.
STANDING WITH OUR STAKEHOLDERS DURING THE COVID-19 PANDEMIC
We started the financial year in April 2020 under government-imposed lockdown and we closed the financial year in yet another lockdown. During the year, the Board supported the management actions taken to ensure the wellbeing of our staff, customers, and other stakeholders. I am proud of the actions that Safaricom took, standing with the country and supporting the social distancing measures such as working from home and the use of mobile money for payments, introduced by the government to curb the spread of the virus. I am particularly proud of the support we gave to cushion our customers from the economic impacts of the crisis by zero-rating Person to Person (P2P) M-PESA transactions under KSh 1 000 and setting up the 719 COVID-19 helpline to support Kenyans in understanding how to prevent and manage suspected cases. To keep our distribution channels running, we supported our dealers and agents through provision of personal protective equipment (PPE) and a credit facility to ensure they had sufficient capital to keep transacting. Through Safaricom and M-PESA Foundations we stood with our communities and our frontline health workers, as they led the efforts to manage the crisis, through supporting the most vulnerable in the society and donation of Personal Protective Equipment all worth over KSh 339 million. I would like to extend my gratitude to our staff who in their personal capacity donated over KSh 2 million and over 380,000 Bonga Points through the 6000 Strong for the Community Initiative. This donation went a long way to supplement the efforts of our two Foundations by providing food packs to the vulnerable families in the informal settlements.
Our main regulators – the Communications Authority of Kenya (CA) and the Central Bank of Kenya (CBK) have been very supportive of our efforts in supporting our customers navigate the crisis, and for this we are grateful. Through allocation of extra frequency by CA, we were able to meet the increased demand for data by our customers working and learning from home. A conducive regulatory environment is important for the growth of our business and the sector at large, especially considering the rapidly evolving technologies and needs of our customers and the society. We are committed to building a resilient and world class network infrastructure that will support our country’s economic development. This has been demonstrated by the sustained capex investment, targeting expansion of the data network coverage and capacity enhancements.
The disruption initiated by the pandemic has meant that we have had to focus on the future of our business and how we can positively impact our stakeholders. Take micro, small and medium enterprises (MSMEs) for example. They are the backbone of our economy and yet the COVID-19 pandemic really hit them hard. The Board, together with the CEO and the management team, have been working on strategies on how to position Safaricom to be future-fit by providing products and services that will help MSMEs and our other stakeholders rebuild.
DELIVERING A RESILIENT SET OF RESULTS AMID CRISIS
While the pandemic has had serious adverse effects across the country, it has highlighted a key attribute in all of us: resilience. In April last year, we were anticipating an extremely difficult period ahead. However, despite the difficult circumstances, we found a way through adversity. We were pleased with the performance especially the recovery noted in the second half of the year. Our half year results showed a solid performance, with positive momentum leading to a recovery of service revenue. This provided an opportunity to give back to our shareholders and support them during the difficult economic times. Accordingly, we issued the first ever interim dividend at KSh 0.45 per share totalling KSh 18.029 billion.
At year end, in addition to the interim dividend, the Board declared a dividend of KSh 0.92 per ordinary share amounting to KSh 36.86 billion which was approved during the company’s AGM.
“Our half year results showed a solid performance, with positive momentum leading to a recovery of service revenue. This provided an opportunity to give back to our shareholders and support them during the difficult economic times.”
MARKING A MAJOR MILESTONE WITH THE LAUNCH OF 5G
We’re proud to be the first operator in East Africa to launch 5G. With 5G, we aim to empower our customers with super-fast internet at work, at home and on the move, supplementing our growing fibre network. As Kenya’s economy continues to digitalise, we hope that our 5G network will play a key role in the country’s 4th Industrial Revolution, particularly in regard to the Internet of Things which has the power to transform education, health and manufacturing, among other things.
A FUTURE-FIT SAFARICOM
In October 2020, we celebrated 20 years of our existence during which we have witnessed great success. This success is not guaranteed in future if we don’t disrupt ourselves and transform our business into a future ready organisation. During the period under review, the Board approved a new strategic positioning that will move Safaricom from a telco business into a fully-fledged purpose-led technology company. This strategy will see us focus on new business areas such as agriculture, education, healthcare, next generation financial services, MSMEs and regional expansion amongst others.
The Board is committed to supporting the management to see through the successful implementation of this strategy.
We look forward to engaging with the relevant government functions to ensure awareness of this strategy and seek support in areas such as legislation, taxation, interpretation of laws, amongst others. The Board recognises the extent to which past actions, from across the different arms of government, have contributed to the growth and success of our organisation. Through our mutual commitment, we will continue investing in the success of this country.
As we go into the future, we are optimistic on the opportunities as the management implements the new strategy of being a purposeled technology company aligned with our nine priority United Nations Sustainable Development Goals.
The Board will continue to work with the management to deliver value to our shareholders but most importantly, will work to ensure that Safaricom continues to transform the lives of our customers, employees, business partners and communities across Kenya as we connect them to the future and beyond.
EXPANSION TO ETHIOPIA
Shortly after year end, we were delighted with the announcement that the consortium led by Safaricom had won the bid for a telecommunications operator licence in Ethiopia. I am pleased with the outcome of this process which is a culmination of many months of work in putting together the bid and building a winning consortium of partners. I would like to extend my gratitude to the management team involved in this and the members of the consortium for the support accorded in this venture.
THANKS
The Board and I would like to extend our deep appreciation to the CEO, management, and all members of staff for their efforts and commitment during a challenging year in staying true to the purpose embedded in our DNA – that of transforming lives.
Michael Joseph
Chairman and Non-Executive Director
Safaricom PLC
