Xrthnty

Safaricom PLC

Safaricom House, Waiyaki Way, Nairobi
Trading name	Safaricom (SCOM)
Type	Public Limited Company; owned by Vodacom 35%, Permanent Secretary (The Treasury) 35%, Vodafone 5% & retail investors 25%
Industry	Telecommunications
Headquarters	Safaricom House, Nairobi, Kenya
Key people	Nicholas Nga'ng'a, Chairman Robert Collymore, CEO Sateesh Kamath, CFO
Products	G.S.M related products and Mobile Money Transfer
Brands	M-Pesa Masoko Songa M-shwari M-Pesa1Tap
Services	Mobile Telephony Mobile Money transfer Consumer electronics Ecommerce Cloud computing Data Music Streaming Fibre Optic
Revenue	KES233.72 Billion (2018)
Operating income	KES79.91 Billion (2018)
Net income	KES55.29 billion (2018)
Number of employees	5,500+ (2018)
Website	www.safaricom.co.ke

Safaricom PLC is a listed Kenyan mobile network operator and operator headquartered at Safaricom House in Nairobi, Kenya^[1]. It is the largest telecommunications in Kenya, and the most profitable company in the East and Central African region^[2]. The company offers mobile telephony, mobile money transfer, consumer electronics, ecommerce, cloud computing, data, music streaming, and fibre optic services. It is most renown as the home of MPESA, a mobile banking SMS-based service.

Safaricom is the leading telecommunications service provider in Kenya, controlling 66.3 percent of the market as at September 2015.^[3] Safaricom had a subscriber base estimated at approximately 25.7 million.^[4]

Safaricom was formed in 1997 as a fully owned subsidiary of Telkom Kenya, In May 2000, Vodafone Group PLC of the United Kingdom acquired a 40% stake and management responsibility for the company.^[5] In 2008, the government offered 25% of its shares to the public through the Nairobi Securities Exchange.

Safaricom was ranked as Africa’s Best Employer, 67th in the World by the Forbes Global 200 list of World’s Best Employers. In March 2018, Safaricom was ranked as the #1 company to work for in the annual BrighterMonday Best 100 Companies to Work for in Kenya according to career professionals and job seekers.^[6]

As of December 2017^[update], Safaricom employed over 5,000 people, of whom 75 percent were based in Nairobi, with the remainder based in other big cities like Mombasa, Kisumu, Nakuru and Eldoret, in which it operates retail outlets. It has nationwide dealerships to ensure customers across the country have access to its products and services.

In November 2012, Safaricom announced it would be offering a new mobile phone banking product in conjunction with the Commercial Bank of Africa, tapping into an underdeveloped financial services market.^[7]

Its current CEO Bob Collymore succeeded founding CEO, Michael Joseph on November 1, 2010.^[8]

History

2G service on 900 MHz and 1800 MHz. 3G DC-HSPA+ service on 900 MHz & 2100 MHz. Safaricom later launched LTE-A (4G service with carrier aggregation) service in Nairobi and Mombasa on band 20 (800 MHz) and band 3 (1800 MHz) in December 2014 and has expanded to other cities.^[9] Safaricom's competitors, Airtel Kenya and Telkom Kenya have expressed dissatisfaction with the way the regulatory body Communications Authority of Kenya, awarded Safaricom its LTE license to operate at 800 MHz.^[10]

Safaricom was the first company in East Africa to possess 3G Internet technology with recent success of 4G / LTE connectivity currently in all major Kenyan cities.^[11]

Flashback service

As a result of the limited income of most of Safaricom's customers, network congestion emerges from a practice called 'flashing'. Flashing is the practice of calling another mobile user, but disconnecting before the connected call is answered. It provides a method for mobile users to alert someone that they wish to be called, but either can't, or won't, pay for the call. The method is cost-free for the users; but costly in network bandwidth.^[12]

That is why Safaricom introduced a flashback service that gave every subscriber five free SMS messages with a single predefined message stating "Please call me. Thank you". Although the messages can be annoying when sent just for fun they can prove useful when one is in trouble and has no airtime. It also gives parents more of a reason to get mobile phones for their children without the real need for getting them airtime.^[12]

Kipokezi service

Safaricom launched the Kipokezi service in May 2000 that enabled its subscribers to send and receive email and online chat through standard mobile phones. The service does not require users to have an Internet connection as it uses ForgetMeNot Africa’s Handset Initiation technology. Prior to the service fewer than one in ten Kenyans had accessed the Internet but the Kipokezi launch allowed more than a third of the population to exchange email and online chat messages.^[13]

M-PESA

It has been suggested that this section be merged into M-Pesa. (Discuss) Proposed since April 2018.

History

This system is remotely comparable to hawala banking or services like Western Union. An M-PESA-enabled mobile phone can also function as an electronic wallet and can hold up to 100,000 Kenyan shilling (approx. US$1,000). Safaricom has announced that it intends to roll out M-PESA to other countries.^[14]

M-PESA (M for mobile, pesa is Swahili for money) is a mobile phone-based money transfer, financing and micro financing service, launched in 2007 by Vodafone for Safaricom and Vodacom. M-PESA was originally designed as a system to allow microfinance-loan repayments to be made by phone, reducing the costs associated with handling cash. After the pilot testing it was broadened to become a general money-transfer scheme.

How it works

Once a user registers for M-PESA, they pay money into the system by handing cash to an M-Pesa agent, who then credits the money to the user’s M-Pesa account. The user then gets an SMS notifying them of the transaction.

A user withdraws money by visiting an agent, who checks that the user has sufficient funds before debiting the user’s account and handing over the cash. An M-Pesa user can also transfer money to others using a menu on their phone. Cash can thus be sent one place to another instantly, safely and easily. This is in contrast to the preferred system before where money was sent by a porter, usually a friend, relative or bus crew, to the intended recipient.

M-PESA was first launched by the Kenyan mobile network operator Safaricom, where Vodafone was technically a minority shareholder (40%), in March 2007. M-PESA quickly captured a significant market share for cash transfers and grew to 17 million subscribers by December 2011 in Kenya alone

The growth of the service forced formal banking institutions to take note of the new venture. In December 2008, a group of banks reportedly lobbied the Kenyan finance minister to audit M-PESA, in an effort to at least slow the growth of the service. This ploy failed, as the audit found that the service was robust. At this time, The Banking Act did not provide the basis to regulate products offered by non-banks, of which M-PESA was one such very successful product. As at November 2014, M-PESA transactions for the 11 months of 2014 were valued at KES. 2.1 trillion, a 28% increase from 2013, and almost half the value of the country's GDP.

On November 19, 2014, Safaricom launched a companion android app Safaricom M-Ledger for its M-PESA users. The application, currently available only on Android, gives M-PESA users a historical view of all their transactions.

M-Pesa’s usage and success in Kenya

M-Pesa has been particularly successful in Kenya, compared to mobile money platforms in other countries. Contributing factors here include the exceptionally high cost of sending money by other methods; the dominant market position of Safaricom; the regulator's initial decision to allow the scheme to proceed on an experimental basis, without formal approval; a clear and effective marketing campaign (“Send money home”); an efficient system to move cash around behind the scenes; and, the post-election violence in the country in early 2008.

During the post-election violence, M-Pesa was used to transfer money to people trapped in Nairobi's slums at the time. Some Kenyans regarded M-PESA as a safer place to store their money than the banks, which were entangled in ethnic disputes. Having established a base of initial users, M-PESA then benefitted from network effects: the more people who used it, the more it made sense for others to sign up for it.

M-PESA has since been extended to offer loans and savings products, and can also be used to disburse salaries or pay bills, which saves users further time and money as compared to doing so from banks.

M-PESA has a wide range of financial services including Person to Person, ATM withdrawal, Payments, Bulk Payments and Bank to M-PESA

As of January 2016, M-Pesa is used by 21.8 million Kenyans, with over 1.5 million of M-Pesa users using the bill payment feature. At the time M-Pesa had a network of over 90,000 agent outlets.

Average value of monthly person to person transfers on M-Pesa was Kshs 106B while Person to Business transfers were at Kshs 23.5bn and Business to Person at Kshs 27.8bn per month.

M-Pesa achieves financial inclusion through the provision of solutions in partnership with a number of banks. M-Shwari and KCB M-Pesa are two such services, which provide access to savings and loans to users.

Elsewhere

South Africa

In September 2010 Vodacom and Ned bank announced the launch of the service in South Africa, where there were estimated to be more than 13 million "economically active" people without a bank account. M-PESA has been slow to gain a toehold in the South African market compared to Vodacom's projections that it would sign up 10 million users in the following three years. By May 2011, it had registered approximately 100,000 customers. The gap between expectations for M-PESA's performance and its actual performance can be partly attributed to differences between the Kenyan and South African markets, including the banking regulations at the time of M-PESA's launch in each country. According to Money Web, a South African investment website, "A tough regulatory environment with regards to customer registration and the acquisition of outlets also compounded the company's troubles, as the local regulations are more stringent in comparison to our African counterparts. Lack of education and product understanding also hindered efforts in the initial roll out of the product." In June 2011, Vodacom and Nedbank launched a campaign to re-position M-PESA, targeting the product to potential customers who have a higher Living Standard Measures (LSM) index than were first targeted.^]

Despite efforts, as at March 2015, M-PESA still struggled to grow its customer base. This comes as no surprise as South Africa is well known for being ahead of financial institutions globally in terms of maturity and technological innovation. According to Genesis Analytics, 70% of South Africans are "banked", meaning that they have at least one bank account with an established financial institution which have their own banking products which directly compete with the M-PESA offering.

Tanzania

M-PESA was launched in Tanzania by Vodacom in 2008 but its initial ability to attract customers fell short of expectations. In 2010, the International Finance Corporation released a report which explored many of these issues in greater depth and analyzed the strategic changes that Vodacom has implemented to improve their market position.[23] As of May 2013, M-PESA in Tanzania has five million subscribers

India

M-PESA, was launched in India as a close partnership between Vodafone India and ICICI bank in November 2011 under the leadership of Mr Suresh Sethi. The service today operates in all telecom circles where Vodafone India is present. Users (of any telecom operator) can activate the M-Pesa service by downloading the Vodafone M-Pesa app (available on all app stores) on to their phones and registering themselves or by visiting any Vodafone store, Vodafone mini-store or M-Pesa agent point across the country. Customers of Vodafone can also activate the M-Pesa service by dialing *400# from their mobiles and completing the registration process. Using the *400# (USSD) facility allows Vodafone customers to avail of the benefits of M-Pesa without having a smartphone or a data connection. Registration is entirely free of charge.

A customer who activates his M-pesa wallet by only providing his basic demographic details and not sharing any proof of identity is enabled as a minimum KYC customer on M-Pesa. A minimum KYC customer of M-Pesa can not do money transfer (P2B, P2P) from his wallet account but can avail services like recharges (Prepaid mobile/DTH), bill payments, merchant payments, EMI payments, utility payments, insurance payments etc. They also have a monthly /daily/per transaction limit of 10000 Indian Rupees. If a minimum KYC M-Pesa customer wants to avail of bank transfer facility/increase his or her monthly transaction limit, then he or she can do so by doing their KYC using their Aadhar at any Vodafone store or M-Pesa agent point.

M-Pesa in India operates under two licenses, the PPI (Prepaid Payment Instruments) license issued by the Reserve Bank of India and the business correspondent license issued by ICICI bank. M-Pesa has also received in -principle nod of the regulator to set up a payments bank in India. Vodafone M-Pesa is the largest business correspondent channel in India with 1.5 lac+ M-Pesa agents who are enabled to provide cash-in, cash-out and assisted payments facility to M-Pesa customers.

Shareholding

In 2008, reports appearing in the cross section of the press indicated that Vodafone Plc of UK only owned 35% while the remaining 5% was owned by a little-known company, Mobitelea Ventures Limited. The reports caused a stir which led to the summoning of its CEO Michael Joseph to appear before the PIC "Public Investment Committee", where he denied knowing who the other shareholder is. A spokesman for Vodafone said "the PIC has no powers to investigate M&A activity (see Mergers and Acquisitions), only to ask to view company accounts of Vodafone Kenya Limited, a company registered in Kenya. Mobitelea Ventures Limited were granted an option to purchase 25% of Vodafone's shares which they completed in 2002, Vodafone bought back half of the stake in 2003 for $10 million,^[15] and in the financial year ending 31 March 2009 purchased the remaining indirect equity stake of 5%, thus returning Vodafone to its original 40% stake-holding.^[16] Vodafone said that whilst it would like to disclose who owns Mobitelea it is unable to because of a confidentiality agreement.^[15]

As of December 2017^[update], the company's stock was owned by the following public and private entities.^[17] The stock of the company is listed on the Nairobi Stock Exchange, where it trades under the symbol: SCOM.^[18]

See also

• Mobitelea Ventures Limited


• List of mobile network operators in Kenya

References

External links

• 
  Official website


• Safaricom Foundation


• Emerging Market Telecom Company Analysis (Safaricom Limitd)

Coordinates: 01°15′33″S 36°47′10″E / 1.25917°S 36.78611°E / -1.25917; 36.78611