Effects Of Social Responsibility Initiatives On Performance Of Safaricom Look at the file that I upload, find page C-179, case 14, named Safaricom: Innovat

Effects Of Social Responsibility Initiatives On Performance Of Safaricom Look at the file that I upload, find page C-179, case 14, named Safaricom: Innovative Telecom Solutions to Empower Kenyans, read the whole case carefully and seriously, and analyze this case from the perspective of an Environmental Analyst, and Focuses on trends in the six segments of the general environment including technological, demographic trends, economic trends, political trends, social cultural trends, & global trends. format: Write your deliverables in a word document first AND save it. Then, copy and paste your document in the appropriate discussion area. Deliverables must be 1.5-2 pages in length and have at least one academic source–12 inch font Times New Roman–double spaced. You need add reference. 17:36
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Case 14: Safaricom: Innovative Telecom Solutions to Empower Kenyans
C-179
CASE 14
Safaricom: Innovative Telecom Solutions to Empower Kenyans
Operating in Africa
According to KPMG, “Africa is the last great untapped
telecommunications market.”10 Market penetration in
Africa is only 47%.” GDP growth in sub-Saharan Africa
remained strong in 2012 at 4.6% despite the global eco-
nomic slowdown.” Kenya is the third largest mobile mar-
ket in Africa, behind Nigeria and South Africa. Kenya
also boasts one of the fasting growing economies in the
region. The number of mobile subscribers is expected
to grow steadily in the medium to long term with an
estimated 13 million new subscribers from 2011 to 2016.
There is currently a pricing war going on between the
four mobile service providers in Kenya.” A graph of
market share for each of these firms is shown in Exhibit 1.
As the largest mobile provider in Kenya, Safaricom has
touched the lives of Kenyans throughout the country,
with products and services designed to empower people.
Safaricom enjoys a 64.5% market share, 77.5% of voice
traffic, and 72.6% of mobile data/internet subscribers.
Safaricom facilitates community involvement through
various organizations such as the M-PESA foundation,
a charitable trust that seeks to advocate programs that
improve health, environmental conservation, and educa-
tion for the financial and social benefit of Kenyans, and
the Safaricom Foundation, whose mission is to partner
with the community to tackle environmental, economic,
and social issues to bring about enduring and progres-
sive change. Safaricom also serves society by sponsor-
ing athletic events through Safaricom Sevens, the biggest
rugby event in Kenya, and by sponsoring the music fes-
tival Niko na Safaricom Live, an event featuring local
music talent and fostering national pride.
Safaricom Ltd. was formed as a private limited lia-
bility company (LLC) in 1997 and became a publically
traded company in 2002. The original company was 60%
owned by the Government of Kenya. In 2000 Vodafone
acquired a large stake in the company through Vodafone
Kenya Ltd, a locally owned subsidiary. In 2008 the
Government of Kenya sold enough shares to the public
to lose its majority interest. There are a total of 40 billion
shares outstanding, which are owned by 698,863 differ-
ent investors as of March 31, 2013. Of those shareholders,
61.2% own less than 1,000 shares. The top two sharehold-
ers, Vodafone Kenya Limited and Permanent Secretary –
The Treasury, now own just over 75% of the company. As
of October 18, 2013, 52 institutional investors owned only
2.3 million shares, or 5.86% of the remaining shares.
Safaricom has grown through a variety of strategies,
including acqusitions. In 2008, Safaricom purchased a
majority stake in One Communications Ltd. in order to
gain access to its data services. The company has also
made several other small acquisitions to enhance its ser-
vices and market share.9
Kenya
Kenya is located in East Africa and earned its indepen-
dence from Great Britain in 1963. Since obtaining inde-
pendence it has been relatively peaceful. The county is
home to over 37 million people and official languages are
English and Swahili, although various indigenous lan-
guages can be heard throughout Kenya. The currency is
the Kenyan Shilling (KSh). Its capital is Nairobi, with a
population of over 3 million people. There are two heads
of state, President Mwai Kibaki and Prime Minister
Raila Odinga. In 2010, Kenyan citizens voted to ratify a
new constitution, which would decrease the president’s
power and establish a bicameral parliament. Kenya has a
fairly significant but declining trade deficit. Key trading
partners for exports are Uganda, Tanzania, Britain and
Germany. Kenya exports a lot of legumes. Key trading
partners for imports are Britain, Japan, Germany and the
United Arab Emirates. The crime rate in Kenya is quite
high, especially crimes of petty theft, armed robbery,
burglary and fraud. Corruption is also quite common.4
The country is fortunate to have one of the most
diversified economies in sub-Saharan Africa. Its main
economic sectors are agriculture, manufacturing
Written by Laura Beauchesne, Nick Dorion, Nathaniel Griggs, and Jeffrey S. Harrison at the Robins School of Business, University of Richmond.
Copyright © Jeffrey S. Harrison. This case was written for the purpose of classroom discussion. It is not to be duplicated or cited in any form without the
copyright holder’s express permission. For permission to reproduce or cite this case, contact Jeff Harrison at RCNcases@richmond.edu. In your message,
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C-180
Part 4: Case Studies
Exhibit 1 Kenyan Mobile Operators by Market Share, March 2012
YuMobile
9%
Orange
11%
On the Human Poverty Index, Kenya ranks 64th out
of 103 countries, with around 50% of the population
living below the poverty line. The unemployment rate
for the country is roughly 40%, where 23% of the pop-
ulation lives on less than $1 per day, and 58% of the
population lives on less than $2 per day. The average
life expectancy at birth is about 57 years. The overall
literacy rate is fairly high for Africa at 85.1%; however
90.6% of males can read and write, compared to only
79.7% of females.20
While human rights in Kenya have improved, there
are still instances of harassment, torture, and extrajudi-
cial murders of citizens by the police. While the govern-
ment pursues individuals accused of such crimes, often
times these people are not convicted. The government
has a poor record on issues such as invasion of privacy,
freedom of speech, and the right to assemble.21
Airtel
15%
Safaricom
65%
Source: Business Monitor International. 2013. M&A analysis – Analysis of Essar’s
Kenya exit plan. London, England: Business Monitor International
and services. Tourism and the export of coffee and tea
serve as the two chief means for bringing in foreign
funds. In addition to coffee and tea, other agricultural
products include wheat, corn, sugarcane, fruit, veg-
etables, dairy products, beef, pork, poultry and eggs.
Nominal gross domestic product (GDP) is 3,036 billion
Ksh. growing at a rate of 5.7% annually (real) with infla-
tion at 7.5%. The Kenyan government
direct investment, and multinational companies make
Services
Safaricom has 19.4 million customers, and the company
offers prepaid and postpaid mobile, voice, and data ser-
vices. About 99% of customers are prepaid customers.
Safaricom has over 2,900 base stations that provide 2G
and 3G cell service to customers, and continues to invest
in upgrading and building new base stations through
the “Best Network in Kenya” program. 3G coverage is
only available in the metropolitan areas of the country.
Safaricom’s growth in cell phone and wireless internet
Rhibit 2.
In the voice segment, the largest revenue segment
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tion, general security, especially in northeastern Kenya,
energy availability and reliability, and M-PESA service
delays. The instability of the Kenyan national energy
grid and lack of energy grid availability in some rural or
isolated parts of the country limits growth.36
and the communities Safaricom serves. The company
has defined the following strategic priorities:
1. Deliver the ‘Best Network in Kenya’
2. Grow mobile and fixed data
3. Deepen financial inclusion
4. Retain and reward the loyal customer base
5. Encourage further innovation.35
Under its “Best Network in Kenya” initiative, Safaricom
has worked to increase 2G and 3G coverage, modernize
the network in six key cities, roll-out fiber in 40% of sites
The Safaricom Foundation
The Safaricom Foundation was founded in 2003 and
disbursed 416.8 Ksh million to 119 projects in 2012. The
foundation is divided into ten areas, including Education,
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Leaming reserves the right to remove adlitional content at any time if subsequent rights restrictions require it.
C-188
Part 4: Case Studies
Exhibit 9 Safaricom Board of Directors
Nicholas Nganga – Chairman
Nicholas Nganga joined Safaricom’s board of directors in May 2004 and was elected the chairman January 2007. Mr. Nganga
also holds positions at G4S Security (chairman) and the University of Nairobi (Vice-chair of the Council).
Michael Joseph – Non-Executive Director
Michael Joseph was the previous CEO of Safaricom and has extensive international experience in the implementation and
operation of large wireless and wire line networks. Mr. Joseph was elected to the board in September 2008, and has been a
recipient of the CEO of the Year award.
Robert Collymore – Executive Director
Bob Collymore is the current CEO of Safaricom and has more than 25 years of commercial experience working in the telecom-
munications sector. Collymore is also a trustee for M-PESA in both Kenya and Tanzania.
John Tombleson – CFO
John Tombleson joined Safaricom as CFO in November 2011 from Vodafone Qatar and has a background in financing growth.
Tombleson first joined Vodafone in New Zealand in 2003.
Susan Mudhune – Non-Executive Director
Susan Mudhune is the former chairman of Kenya Commercial Bank and joined the Safaricom board in May 2009. She also
holds the position of Director at Kenya Commercial Bank.
Nicholas Jonathan Read – Non-Executive Director
Nick Read joined Vodafone in 2001 and is responsible for operations in Africa, Middle East, and Asia Pacific. Read joined the
Safaricom board in January 2010.
Ahmed Essam – Non Executive Director
Ahmed Essam joined Vodafone Egypt in 1999 and now is responsible for the commercial operations in Africa, Middle East and
Asia Pacific. Essam joined the board in September 2012.
Sunil Sood – Non Executive Director
Sunil Sood is the COO for Vodafone India and joined the Safaricom board in September 2012. Sood has a diverse background
and was originally the CEO of Pepsi in Bangladesh, until building 12 years of telecom experience with Vodafone.
Health Education, Disaster Relief, Water, Economic
Empowerment, Sport, Environment, World of Difference,
M-PESA Foundation, and Other.37 Safaricom recognizes
“the continued need to invest in maternal and child health;
as well as the important role that mobile communications
technology plays in transforming lives in areas such as
health, education, and economic empowerment.”38 The
Safaricom Foundation’s “World of Difference” program
is a multi-phase initiative that empowers the citizens of
Kenya to make a difference in the areas of health, edu-
cation, economics, access to clean water, disaster relief,
environmental conservation, arts, culture, and sports.39
68% of these customers located in emerging markets.41
The company has operations in every continent except
Antarctica. In Africa and the Middle East, Vodafone
operates in nine countries including: Qatar, Egypt, Kenya,
Democratic Republic of the Congo, Ghana, Tanzania,
Mozambique, Lesotho, and South Africa.42 According a
study by the World Bank, a 10% increase in mobile pen-
etration can add 1.2% to the annual economic growth in a
developing nation. The company’s vision is for Vodafone
mobile services to further improve people’s livelihoods and
the quality of life.
Vodafone licenses (although Safaricom operates)
the M-PESA service in Kenya.3 M-PESA is currently
also in place in Tanzania, South Africa, Afghanistan,
Qatar, and Fiji. Moreover, Vodafone launched M-PESA
on a small scale in Rajasthan, India, in preparation for
launch across Indias in 2013.44 Safaricom has roaming
agreements in place with several Vodafone subsidiaries
Vodafone Group PLC
Vodafone Kenya Ltd., whose parent corporation is
Vodafone Group Plc, is the largest shareholder in Safaricom
Limited.40 Vodafone has over 404 million customers, with
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove adelitional content at any time if subsequent rights restrictions require it
Case 14: Safaricom: Innovative Telecom Solutions to Empower Kenyans
C-189
Exhibit 10 Headcount Statistics
Job Level
Total Staff’12
Women’12
Total Staff’13
Women’13
% Women’12
% Women ’13
1
1
0
1
0
0.00%
0.00%
2
10
3
11
4
30.00%
36.36%
3
34
14
36
15
41.18%
41.67%
4
126
33
142
41
26.19%
28.87%
5
220
66
259
67
30.00%
25.87%
6
516
181
548
210
35.08%
38.32%
7
545
238
572
249
43.67%
43.53%
8
1247
623
1095
560
49.96%
51.14%
9
2
0
2
0
0.00%
0.00%
n/a
nda
588
364
n/a
61.90%
Temp
Total
2701
1158
3254
1510
42.87%
46.40%
17:38
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is a multi-phase initiative that empowers the citizens of
Kenya to make a difference in the areas of health, edu-
cation, economics, access to clean water, disaster relief,
environmental conservation, arts, culture, and sports.39
developing nation. The company’s vision is for Vodafone
mobile services to further improve people’s livelihoods and
the quality of life.
Vodafone licenses (although Safaricom operates)
the M-PESA service in Kenya.43 M-PESA is currently
also in place in Tanzania, South Africa, Afghanistan,
Qatar, and Fiji. Moreover, Vodafone launched M-PESA
on a small scale in Rajasthan, India, in preparation for
launch across Indias in 2013.44 Safaricom has roaming
agreements in place with several Vodafone subsidiaries
Vodafone Group PLC
Vodafone Kenya Ltd., whose parent corporation is
Vodafone Group Plc, is the largest shareholder in Safaricom
Limited.40 Vodafone has over 404 million customers, with
Copyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, er duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or Chapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall leaming experience. Cengage Learning reserves the right to remove adlitional content at any time if subsequent rights restrictions require it.
Case 14: Safaricom: Innovative Telecom Solutions to Empower Kenyans
C-189
Exhibit 10 Headcount Statistics
Job Level
Total Staff’12
Women’12
Total Staff’13
Women’13
% Women’12
% Women ’13
1
1
0
1
0
0.00%
0.00%
2
10
3
11
4
30.00%
36.36%
3
34
14
36
15
41.18%
41.67%
4
126
33
142
41
26.19%
28.87%
5
220
66
259
67
30.00%
25.87%
6
516
181
548
210
35.08%
38.32%
7
545
238
572
249
43.67%
43.53%
8
1247
623
1095
560
49.96%
51.14%
9
2.
0
2
0
0.00%
0.00%
Temp
n/a
n/a
588
364
n/a
61.90%
Total
2701
1158
3254
1510
42.87%
46.40%
Source: Safaricom Limited. 2012. Annual report. Nairobi, Kenya: Safaricom Limited.
Source: Safaricom Limited. 2013. Annual report. Nairobi, Kenya: Safaricom Limited.
in other countries, which benefits Safaricom customers
when they travel. There is an additional agreement in
place that gives Safaricom access to Vodafone’s global
price book and supply chain resources for the purposes
of procurement, terminals management, technical
expertise, best practices, business knowledge, business
assurance, consumer products, and marketing support.
This agreement also stipulates a participation fee, fixed
at six million Euros annually.45
Industry Competition
Safaricom currently has three direct competitors in
Kenya – Bharti airtel, Telkom Kenya, and YuMobile.46
There are also several other potential competitors, defined
as firms that operate in Africa but not in Kenya, includ-
ing Millicom, Etisalat Emirate Telecommunications
Company, and MTN Group.
and EBITDA of $4.3 billion USD. Of this revenue, 49%
can be attributed to Indian and South Asian wireless
services and 27% comes from African wireless services.
Bharti airtel has the greatest market share in India, hold-
ing 22% of the wireless subscriber market. Vodafone is
in second place with a 17% market share. In 2011, Bharti
airtel acquired Zain Africa B.V., gaining entry to the con-
tinent. The firm now operates in 20 countries with the
objectives of growing the brand, diversifying to reduce
its India risk, and replicating its effective operations
model. Bharti believes it has achieved a global stature
with a focus on emerging markets, significant synergies
and a strong platform for future expansion.5°
Bharti airtel operates under its unique business
model known as the “Minutes Factory”, which focuses
on producing the lowest cost minutes while maintain-
ing/growing margins. This strategy focuses on driving
affordability to gain more users and thus more usage,
which leads to improved economies of scale and an
increase in profitability, thereby also allowing the firm
to make the product more affordable.51
Bharti airtel
Bharti Airtel Limited is a leading global telecommuni-
cations firm with operations in Africa and Asia. The
company is headquartered in New Delhi, India and has
190 million mobile subscribers in India alone, with an
additional 72 million mobile customers internation-
ally.*The firm describes itself as a multi-platform ser-
vice firm operating in telecom, enterprise, and digital
tel ision, unified under the “airtel” brand.48 In terms
of subscribers, it ranks in the top four for global mobile
service providers. Under IFRS standards, the firm’s reve-
nue was Rs. 202,995 million and EBITDA was Rs. 65,449
million.49 This amounts to revenue of $14.7 billion USD
Telkom Kenya (Orange)
Telkom Kenya was established in 1999 as Kenya’s original
telecommunications operator.52 The firm’s mission states,
“We will connect every Kenyan through integrated com-
munication solutions that simplify and enrich their lives.
We are a social and business alyst, liberating and inspir-
ing people with ideas and services to connect, collaborate,
and co-create in new and exciting ways’s Their values are:
friendly, straightforward, honest, refreshing and dynamic.54
Telkom Kenya provides integrated communications
Copyright 2017 Cengage Leaming. All Rights Reserved. May not be copied, scanned, a duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall leaming experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
C-190
Part 4: Case Studies
solutions in Kenya with a wide range of voice and data
services as well as network facilities for residential and
business customers. The company has 2.8 million sub-
scribers on various wireless platforms throughout Kenya.5
Furthermore, the firm reinvests profits to promote corpo-
rate social responsibility, which includes a commitment to
sustainable development achieved through Telkom Kenya’s
three chief focus areas: health, environment, and digital
solidarity, spreading the benefits of mobile technology and
the internet to enable more people to communicate, learn,
and share knowledge. 56
In 2008, Telkom Kenya formed a partnership wit…
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