In March, 2008 Safaricom did an initial public offering (IPO) that was oversubscribed by 532 per cent. That was a demand of Ksh 226b against the Ksh 51b that the company had set out to raise. The primary benefit of listing was to gain access to capital to be used for expansion, research and development, marketing et cetera. Once public, a company will need to put out regular disclosure statements and share other such financial information with the world. This means that information about the financial performance of Safaricom, being a listed company is readily available to the public.
That is very different from Airtel and Telkom companies which are privately owned. Claims that Safaricom are dominant on revenues and profits can therefore not be ascertained. Privately owned companies can however voluntarily disclose their financials to the public using the various available media such as the company website and daily newspapers.
The other qualitative aspect of looking at the Kenyan telecommunication sector is their management. From the outset, Safaricom looks like a company that is built to last. Its consistent financial performance, stability and successful execution of succession planning mirror the key tenets of a company built to last over 100 years.
Airtel and Orange on the hand have exchanged ownership a couple of times in the past two decades. Each regime has stamped their ethos disrupting smooth flow of operations and execution of strategies. Indeed turnarounds take time and do not work at times. Even in the financial services sector, we have seen companies that have changed hands and rebranded such as Fina to Gtbank, Krep to Sidian and Equatorial commercial bank to Spire bank and UAP to Old Mutual UAP struggling as the new managements and owners work day and night to position themselves favourably in their market segments. Never has it been about dominance but working towards meeting the distinctive needs of customers and being competitive. Or is there another way of gaining significant market share?
The opaque way in which Airtel and Telkom run their operations makes it difficult to establish their financial and business performance. This makes them less endearing to the public compared to Safaricom which on top of its annual financial releases its annual sustainability reports. The sustainability report is rich with very interesting information on how the company interacts with and contributes to building communities and the various stakeholders in the Kenyan market.
Safaricom for example has an equitable distribution of men and women as its staff, something that we can easily access from their 2007 sustainability reports. Given the different levels of disclosures apart from the statistical disclosures from the Communications Authority of Kenya, It is not currently possible to intelligently compare the financial and business operations of the telcos and be able to give a factual report on their revenue and profit market shares.