Is Safaricom slowly but surely crumbling under the leadership of Peter Ndegwa? Could it be too early to judge him?
These and other questions abound as to how pretty well Ndegwa, 52, is sitting at the 7th floor corner office of the giant mobile network operator’s Waiyaki Way head office Safaricom House building as the third CEO.
Being one year and ten months into his job, talk is rife from different quarters as confirmed by Cofek that all might not be well at Eastern Africa’s most profitable and enviable business.
It is whispered that the humble-looking Starehe Boys Centre, University of Nairobi, University of London alumni and a certified accountant is struggling to fit in late Bob Collymore’s shoes – whom he replaced on April 1, 2020.
Current chairman and former CEO Michael Joseph led the telco in acting capacity after the death of Collymore on July 1, 2019.
It is within that period that he made an interesting remark that Safaricom was not ready for a Kenyan CEO.
The remark did not bode very well with President Uhuru Kenyatta’s government which holds 35 percent shareholding. Behind the scene moves led Ndegwa to be headhunted from Diageo, UK.
Joseph led the biggest mover at the Nairobi Securities Exchange for a decade, and he is credited for launching M-Pesa that accounts for larger portion of the firm’s earnings.
He took over board chairmanship from Nicholas Ng’ang’a who exited on July 30,2020.
It is not lost to keen observers that the latest events at Safaricom appear to be vindicating Michael Joseph’s then controversial view, Cofek review can confirm.
Hushed talk has been rife on Ndegwa’s likely early exit as Safaricom CEO. But why is the talk securing considerable credibility each passing day? Many reasons abound.
First, friends and foes describe him as a ‘lone ranger’, ‘timid’ and ‘media shy’.
‘He is the only Safaricom CEO who can go for 3 months or more months without appearing on television. His PR agents try to pen articles in his name but most of them are either never approved and or delayed’, said one of our sources familiar with the industry.
Although we could not independently verify this, our source told Cofek Ndegwa ‘has an unclassified complex’ and he ‘is autocratic and has little time for consultation even with senior management. His decision is final’.
He is one individual who ‘prefers working behind scenes and has little or no relationship with government save with one or two CS’es from Mt Kenya’, added a source familiar with the industry.
In his rare public and media appearances, Ndegwa has strictly kept to business. He hardly opens up about his social life unlike Collymore who could talk of flying planes, art and music.
Joseph will always be remembered for ‘peculiar calling habits’ remark on Kenyans calling at the same jamming the switches.
‘In fact Ndegwa behaves more like an expatriate than a Kenyan working in his home country’, another source added.
That could be true at least to Cofek, for instance, that has enjoyed cordial relations with previous CEOs.
Ndegwa has had little or no time for stakeholder consultation or partnership – even courtesy meeting that was a signature tradition of his predecessors. if he does it, its strictly off the public eye – which negates the very essence.
The soft spoken Safaricom CEO, in line with his demeanour, has been conspicuously absent at public appearances involving his colleague CEOs and the regulator.
Instead, he has been sending representatives to such meetings – which development could be concluded that he is either too busy with other priorities or he probably cannot articulate what his predecessors had at their fingertips.
‘Recall he had a false start when he tried to restructure senior management of Safaricom immediately he came in. He attempted to consolidate some roles and put others on contract.
‘The move flopped when it was resisted internally and externally by the likes of (COTU Secretary General Francis) Atwoli’, another source within the industry told Cofek.
A PR professional who talked to Cofek, on strict call of anonymity, said he is ‘…not surprised that MJ (Michael Joseph) continues to run the show at Safaricom by presiding over even the lowest rated press briefings that ordinarily should be left to the CEO and or head of corporate affairs – a position yet to be filled. MJ must be having low confidence levels in Peter, I think,’ he added.
A curious comment came from the telco’s former supplier who claimed that Ndegwa was not opening business taps to suppliers as was the case of his predecessors. ‘I used to rely on someone who got huge business from Safaricom as a third party. Since Ndegwa came in, business is very low!’, he exclaimed.
The epic fall of the Safaricom shares at the Nairobi Stock Exchange (NSE) to a low of Sh26 on July 25, 2022 in under a year when it stood at Sh41 is said to be a major worry for the board and shareholders generally.
The 37 percent drop in value has caused jitters in the investment clubs with analysts fearing that a further drop will likely crumble the Nairobi bourse.
Safaricom accounts for 60 per cent of total market cap at NSE. It is huge. Its everything to NSE. But it is a scare if it were to tumble further down as it is the case presently.
Ndegwa’s critics believe his absence from the public eye and a claim that he has given up on the war against the pressure to separate the most successful M-pesa and the main business is hurting the company.
That the rivals Airtel and Telkom appear to be rising is causing jitters to the ‘real owners’ of Safaricom who have survived the spirited onslaught by parliament and other quarters to declare them ‘dominant player’.
‘Bob Collymore took the war to his competitors by insisting that they will never punish success and innovation. The current CEO has allowed the Lipa-Na-Mpesa platform to be used by competitors.
‘He failed to persuade the regulator not to touch mobile termination rate (MTR). His choice to fight back the regulator will cost the company even more’ said an industry consultant well-versed with the industry.
For two years in a row under his tenure, Safaricom has posted declining net profits.
The giant telco posted a 1.7 percent profit drop for the financial year ended March 2022 of Sh67.49 billion attributed to loss making Ethiopia unit, an investment it went ahead with despite a raging war in the country.
In the financial year ended March 2021, net earnings dropped by 6.8 percent to Sh68. 67 billion from Sh73. 65 billion the previous year, blamed on Covid-19 pandemic.
There is also the angle of what the industry stakeholders call the ‘Ethiopia error’ (operations from Addis Ababa) which challenge has been compounded by a reluctant American financier.
The stalemate has reportedly forced Safaricom to negotiate with local banks for expensive short-term financing. A bank associated with the First Family is said to be having an upper hand on the lucrative deal.
‘The problem with Ethiopia is that Ndegwa appointed an executive team long time ago. They are earning hefty salaries for doing nothing.
‘The security situation remains unpredictably risky. The delayed financing is leading to a very difficult start’, said an industry insider.
The challenges at Safaricom have had a lot to do with exits of top executives, too – most of them leaving within Ndegwa’s short tenure – reportedly for greener pastures (public version) but some sources say otherwise – they felt frustrated.
The corporate affairs directorate has been particularly hit hard. From the days of Stella Ruto (now with Telkom), Nzioka Waita (contesting Machakos governor seat) to the quiet but effective Stephen Chege who was promoted and moved to South Africa under Vodafone.
Since his departure, Chege has neither been replaced nor anyone has been announced to act in his position. As a result the public relations dent has been conspicuous.
The firm has become too reactive. The Inooro FM statement by the Kenya Kwanza running-mate Rigathi Gachagua that led to a viral fake statement supposedly from Safaricom did enough damage on social media before it was disclaimed.
Another angle has been the slow and unpredictable rollout of the 5G network. From the promise of cheap smartphones to securing a 5G license that cannot assist the firm on expensive mobile phones.
Safaricom is now mulling deploying 5G as part of the Fibre to Home since few consumers can afford the 5G enabled handsets.
The success of KCB M-pesa and fact that it is linked to NCBA’s Mshwari platform has also raised silent power struggles between the giant telco and the two banks.
Elsewhere, there are those who feel Ndegwa’s problems could be linked to him ‘resisting financing the August 9 general campaign’s for the preferred government candidate.
Although this could not be independently verified, it is common global practice that private sector discretely finances both sides of top candidates likely to win the elections – in return for regulatory favours.
Customer service quality appear to have deteriorated. Although the regulator still rates Safaricom highly on the quality of service parameters, increasingly – call drops, poor data connection speeds and call set up challenges are creeping back, among other challenges.
Efforts for Cofek to get comments from Safaricom failed as our contact did not respond to our inquiries.
Final questions being asked – Is the centre getting weak at Safaricom? Are things falling apart?
At Cofek, we hope not. Safaricom is too important to be left to start crumbling. We hope the shareholders are watching. Very keenly. With mitigation measures.
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