Type Public.

Owned by Vodafone 40% & Permanent Secretary (The Treasury) 35%

Industry Telecommunications

Headquarters Nairobi, Kenya

Key people CEO.

Products G.S.M.-related products

Revenue £670 million (2010)

Operating income £188 million (2010)

Net income £171 million (2010)

Employees 1000+

Website www.safaricom.co.ke

Safaricom, Ltd is a leading successful mobile network operator in Kenya. It was

formed in 1997 as a fully owned subsidiary of Telkom Kenya. In May 2000, Vodafone
group Plc of the United Kingdom, the world's largest telecommunication company,
acquired a 40% stake and management responsibility for the company. With greater
clarity about global challenges, Safaricom’s focus will continue to remain on meeting our
subscriber needs, offer unparallel quality service and continue to improve on our
coverage country wide. In order to succeed in our business, we have come to rely on
understanding unique customer segments where we can make a difference. We are a “one
stop shop” for integrated and converged data and voice communication solutions.
Safaricom with its countrywide network is the only network that can provide broadband
high-speed data to its customers through its 3G network, Wimax and fibre. Safaricom
share price on a steady rise in the past few days.

Bloomberg reports that Morgan Stanley has revised its price estimate and raised it to
6.40 shillings from 4.80 shillings.

Their overweight position on Safaricom is bouyed by improved earnings, more

penetration of M-Pesa and new broadband revenue streams.

Morgan Stanley estimates 22 percent group revenue growth in 2010 and a further 16
percent in 2011 compared with 12 percent and 10 percent previously. It also sees “room
for positive surprise” on dividends.
Their services are all geared towards growth. They seek to make positive contributions to
communities in direct ways through value added services and financial support for
community projects. Their commitment in giving back to the society seeks to address
Health, Sports, Culture, Environment and Education.

It’s customers make Safaricom exceptionally successful and they always seek to attract,
develop, reward and retain outstanding individuals who we are committed to offering
challenging responsibilities and development opportunities.

As of January 13, 2010, Mr Michael Joseph is the CEO. Recent reports appearing in the
cross section of the press indicate that Vodafone Plc of UK only owns 35% and the
remaining 5% is owned by a little known company, Mobitelea Ventures Limited. The
reports have caused a stir which led to the summoning of its CEO Michael Joseph to
appear before the PIC "Public Investment Committee", during which he denied knowing
who the other shareholder is. It is widely believed that the former regime arm twisted
Vodafone to shed off the 5% as a kickback to high ranking officials in the regime.
Safaricom's initial public offering of stock, on the Nairobi Stock Exchange, closed in mid
April 2008.

Safaricom employs over 1500 people mainly stationed in Nairobi and other big cities like
Mombasa, Kisumu, Nakuru and Eldoret in which it manages retail outlets. Currently, it
has nationwide dealerships to ensure customers across the country have access to its
products and services.

As of January 2010, Safaricom boasts a subscriber base of approximately 12 million,

most of whom are in the major cities - Nairobi, Mombasa, Kisumu and Nakuru.

Its headquarters is located in Safaricom House, Waiyaki Way in Westlands, Nairobi. It

has other offices in the city center in I&M building, Kenyatta Avenue ,on Kimathi Street
and at Shankardass House - next to Kenya Cinema Moi Avenue.

Safaricom Limited, together with its subsidiaries, provides mobile phone, fixed line
wireless telecommunication, Internet, and data services in Kenya. It offers prepay
services, which include international dialing, voice mail, prepay roaming, customer care
access, tariff migration, loyalty scheme, travel and roaming, and directory and
information; postpay services; and data and messaging services, such as short messaging
services (SMS), email, multimedia, call waiting/holding, and security 911, as well as
updates for news, sports, and entertainment. The company also provides M-PESA, a
service that allows customers to transfer money using a mobile phone; premium rate
services that offer recorded information or live conversation for callers; and loyalty
schemes. In addition, it offers various other services, such as voice SMS and mobile
advertising; missed call alert; SIMEX, an over-the-air service that allows subscribers to
replace their SIM cards; pre-paid roaming top-up; and 3G network services. Further, the
company operates retail outlets that offer phones, SIM cards and information brochures,
laptops, 3G enabled devices, and accessories in Thika, Meru, Eldoret, Kitale, Kisii,
Kisumu, Mombasa, and Nairobi in Kenya. Safaricom Limited provides its products and
services through retail centers and distributors. It operates approximately 500 retail
outlets. The company was incorporated in 1997 and is based in Nairobi, Kenya
IT’S MAIN RIVAL IS ZAIN .Other rivals include Essars YU and Orange Wireless.
Snapshot of SAFARICOM LTD (SAFCOM)

OPEN PREVIOUS CLOSE

KSh5.70 KSh5.65
DAY HIGH DAY LOW
KSh5.80 KSh5.70
52 WEEK HIGH 52 WEEK LOW
08/3/10 - KSh6.15 10/6/09 - KSh3.40
MARKET CAP AVERAGE VOLUME 10 D
230.0B 9.9M
EPS TTM SHARES OUTSTANDING
KSh0.38 40.0B
EX-DATE P/E TTM
09/3/10 15.2x
DIVIDEND DIVIDEND YIELD
KSh0.20 1.74%
K = Thousands M = Millions B = Billions

SAFCOM:KN Historical Stock Quote

SAFCOM:KN Advanced Stock Chart
Safaricom has charitable functions where it helps the less fortunate in the society mostly
through the Safaricom Foundation. Safaricom Foundation invests Shs21.8 million in
promoting local art and culture.

June 24, 2009 - Safaricom Foundation will spend Shs21.8 million to renovate the National Museum of
Kenya’s Louis Leakey auditorium.The project is part of the rebranding process being carried out by the
National Museums of Kenya (NMK) in conjunction with Safaricom Foundation and Kenya Museum
Society (KMS) that includes refurbishment and modernization of its buildings and exhibitions.

Speaking during a media briefing in Nairobi, Safaricom Foundation Chairman Les Baillie said the
refurbishment of the facility and opening up of the facility to theatre performances is aimed at promoting
the diverse local art and culture. Baillie says the preservation of Kenya’s cultural heritage, promotion of the
arts, music, theatre and other forms of artistic performance is what will make Kenya, uniquely Kenyan.

“It is this artistic and cultural platform that reflects the society in which we live, but also acts as a draw for
people of different countries and cultures to experience all that we have to offer.”

We look forward to the auditorium hosting quality performances by Kenyan and international arts, music
and cultural groups, for the benefit of a wide audience,” he added.
The Louis Leakey Auditorium was constructed in 1977 at the National Museums of Kenya headquarters in
Nairobi to provide space for the various education programmes and has been limited to hosting meetings,
lectures and conferences.
National Museum of Kenya (NMK) Public Relations Officer Connie Maina says the renovated ancient
facility will provide a perfect platform for the interpretation and presentation of Kenya’s intangible heritage
through theatrical performances, screenings of audio-visual material as well as talks and lectures.
“The renovation project will provide a modern and competitive event facility that can be used by both the
museum audience and additional new markets. The usability of the facility will be expanded by installing
theatre and performance capabilities,” she said.

Once renovation is completed, the auditorium is also expected to provide significant income for the
National Museums of Kenya in the rental of the facility for more numerous and wider varieties of events.
Kenya Museum Society’s Catherine Nyakio said her organization was committed to the development of
rich and culturally relevant public programs that will maximize the use of this state of the art facility.

In addition, she emphasized the need to support arts, music and culture saying a strong arts and culture
community was essential for the social sustainability of a nation.

Poultry Project to Boost Income for Children’s Home

July 30, 2010...... Safaricom Foundation has sponsored a Kshs 227, 000 poultry project aimed at generating
income for a street children’s home in Nakuru.

Fafi district gets first girl’s secondary school

Wednesday July 14, 2010........Assistant Education Minister Prof. Ayiecho Olweny has opened the first
girl’s secondary school in Fafi District, built partly through funding by Safaricom Foundation to the tune of
Kshs 5.4 million

SAFARICOM FOUNDATION DONATES TOWARDS WATER PROJECTS AND FLOOD

VICTIMS

Wednesday July 7, 2010........Safaricom Foundation has donated Kshs75 million towards water projects in
Arid and Semi Arid areas under the Maji na Uhai initiative being implemented by Kenya Red Cross
Society and Action Aid.
Safaricom Foundation launches World of Difference Phase Two

April 29, 2010 – Safaricom Foundation has launched its second phase of the World of Difference initiative
with a view to encouraging most its employees to volunteer to offer their expertise in developing Kenyan
communities.

USTAWI FOOD SECURITY INITIATIVE

December 2nd 2009 – Safaricom Foundation has partnered with a local Non-Governmental Organization in
an effort to stem food shortage in Kenya.

The partnership with the Kenya Community Development Fund (KCDF) dubbed Ustawi will aim at
providing sustainable food security solutions to the country’s perennial food shortage.

Newspapers in Education

October 23, 2009 – Safaricom Limited and Foundation have signed a partnership program with the Nation
Media Group that aims to promote readership of current affairs among the country’s youth.

Patients to get free treatment for Obstetic Fistula

August 10th 2009 – Safaricom Foundation has set aside Shs12.9 million to provide treatment, care and
support for people with fistula this year.

The funds which will be channelled through Jamaa Mission Hospital located in Nairobi’s Uhuru Estate will
enable both women (and the rare cases of men) suffering from fistula to access specialised treatment at the
health facility for free.

Fistula, which is often referred to as obstetric fistula since it occurs primarily among women during
childbirth is a condition whereby a hole (fistula) develops within a woman’s reproductive system after
prolonged or obstructed labour and when emergency obstetric medical care is not available.

Winners of the Safaricom Foundation World of Difference CSR Initiative

June 18, 2009 – Safaricom Foundation announced the winners of World of Difference, a unique corporate
social responsibility initiative, which aims at promoting community work and volunteerism among
Safaricom staff.
The project proposals that carried the day include one that will involve Safaricom staff working together
with Moving the Goal Posts, a Non-Governmental Organization which uses soccer to create awareness on
reproductive health and life skills among young girls in Kilifi.

The second winning team conceptualized a partnership with the Kenya Red Cross, which is involved in
disaster relief all over Kenya, while the third one will work with Northern Rangelands Trust, a community-
based organization that runs a micro credit and trading initiative aimed at empowering women and
pastoralist communities in Northern Kenya.

Under the new CSR initiative, Safaricom staff will be given a three-month paid leave to go and work on
community projects of their choice in collaboration with Safaricom Foundation’s partners.
Safaricom have come across different types of reward schemes for it’s loyal customers and
same time to gain huge proportional market share as follows:

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.

That is why Safaricom sometime ago introduced a flashback service that gave every
subscriber 5 free SMS messages with a single pre-defined message stating "Please call
me. Thank you". Although the messages can be annoying when sent just for fun they are
very useful when one is in trouble and has no airtime. It also gives parents more of a
reason to get mobile phone for their children without the real need for getting them
airtime. Unfortunately, at this time, the flashbacks can only be sent to Safaricom
subscribers due to some feuds with Zain and YU, Safaricom's main competitor.

ELECTRONIC CASH SERVICE Safaricom has developed and launched nationwide an

mobile banking service called M-PESA, that allows Kenyans to transfer money via SMS.
[1]
The service does not require users to have bank accounts, an important aspect in a
country like Kenya, where many people do not have bank accounts. With M-PESA, the
user can buy digital funds at any M-PESA agent and send that electric cash to any other
mobile phone user in Kenya, who can then redeem it for conventional cash at any agent.
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 50,000 Kenyan shilling.[2] Safaricom stakeholder Vodafone, which partnered in the
development of M-PESA, has announced that it intends to roll out M-PESA
internationally as well.

KIPOKEZI SERVICE Safaricom launched the Kipokezi service in May 2010 that
enabled its subscribers to send and receive email and online chat through standard mobile
phones [3]. Any phone with an SMS service can use Kipokezi [4].

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 [5]. The Kipokezi is provided by ForgetMeNot Africa [6].

The service does not require users to have an Internet connection as it uses ForgetMeNot
Africa’s Handset Initiation technology.
 Essar Telecom Kenya (Yu)

Essar Telecom Kenya (Yu) is the 4th GSM licensee in Kenya NOT as successful as the
leading market leader, SAFARICOM,offering a full suite of mobile services to a rapidly
growing prepaid customer base.

Yu’s relationship with Cerillion started in the summer of 2008, when Yu (then known as
Econet Wireless Kenya) contracted Cerillion to implement its Interconnect Manager
system to manage all of Yu’s interconnect agreements.

Following the selection of the interconnect system, Yu then chose the Cerillion Express
CRM & Billing solution to fulfil its customer management requirements, including a very
tight implementation timescale to meet a license requirement for commercial launch in
the Autumn.

As a newcomer to Kenya, Yu operates in a highly competitive market alongside

three other mobile operators, and is planning to expand to neighbouring
African countries in the future. As of February 2009, Yu has in excess of
200,000 customers having launched in Nairobi and Mombasa. The company
plans to extend its network nationwide by the Challenges

As the newest entrant to Africa in general and to Kenya in particular, Yu strives to offer
the market's best prices, which forces organisational efficiency to minimise operational
costs. Key challenges for the business support systems included:

• Comprehensive CRM solution required for all telecoms services and customers
• Four month implementation period
• Close integration with Ericsson prepaid platform
• Efficient interconnect partner management
• Support for a wide variety of price offers
• Future ability to extend to multiple countries run from a single data centre

Cerillion Solution

The solution at Yu is made up of the following components in the pre-integrated Cerillion

suite deployed using the Cerillion Express delivery option on an IBM/Oracle platform:

• Revenue Manager
• CRM Plus
• Web Self-Care
• Output Streamer
• Information Manager
 • Interconnect Manager

Results

Against very demanding project timescales, Cerillion rose to the challenge and
successfully implemented its Interconnect and CRM & Billing solutions in time for the
launch of Yu at the end of November 2008.

“The mobile-specific nature of Cerillion Express and the ease of integration it supports
has been critical in enabling us to meet all of our tight project deadlines” commented
Michael Foley, CEO of Econet Wireless Kenya.

Key to the successful launch was the close integration with the Ericsson prepaid platform,
allowing for a much higher level of customer service to be provided to Yu’s customers
than is usually offered to prepaid subscribers in Africa.

Cerillion Express provides Yu with a functionally rich, end-to-end solution which

streamlines its key customer management processes and helps it to deliver an exceptional
level of service in a cost-efficient manner.

Cerillion Interconnect Manager is also helping Yu to optimise its Interconnect

agreements and settlement processes, achieving very high levels of accuracy in monthly
reconciliations.

Essar Telecom Kenya and Cerillion maintain close partnership relations as Essar is now
planning to provide postpaid services and extend its coverage to other countries in the
region.

Essar Group Looking to Sell Vodafone Essar Stake

India's Essar Group is reported to be planning to float some of its 33 percent stake in
Vodafone Essar - it's joint venture with Vodafone. A sale of a 10 percent stake may take
place early next year, Bloomberg News reported, citing people close to the matter. A ten
percent stake is estimated to be worth at least US$855 million.

Last year, it was reported that the Essar Group moved a 10.97% stake from its telecom
arm Essar Teleholdings to a newly-created firm ETHL Communications Holdings. At the
time it was thought that the intention to use the stake as collateral for fund raising
purposes

Essar has an existing option that enables it to force Vodafone to buy its entire stake for
US$5 billion - or it can sell its stake in parts either to a trade investor or through a stock
market floatation. The option for the sale opened in May and runs for one year.

Vodafone paid US$10.7 billion for its 66% stake in the company back in 2007. Since
then it has been fighting a US$2 billion tax bill from the government, and also wrote
down the value of its stake by US$3.3 billion in May. The company also paid US$2.48
billion for 3G licenses in the country's recent auction.
The Ruias of the Essar group also own Mumbai based Loop Mobile (formerly BPL
Mobile). As part of Vodafone's move into the Indian market, the company agreed to buy
BPL Mobile from the Ruias of the Essar Group and merge it with Vodafone Essar.

The Ruias originally brought BPL Mobile on behalf of Hutch in 2005, but then refused to
transfer the ownership, citing lack of regulatory permission for the merger of BPL with
Hutch (now Vodafone Essar) after their agreement ended in August 2006.

It has been long suspected that they want to hold onto BPL Mobile and use its licenses to
build up another telecoms operator. Vodafone is known to has sought legal advice over
the firms' plans to build a national wireless local loop operator though licenses held
through an unrelated company, which just happens to also be called Loop Telecom. The
rebranding of BPL Mobile as Loop Mobile last year raised speculation that Essar Group
is proceeding with its national network plans.

Reducing its holding in Vodafone Essar would open the way for the Essar Group to push
ahead with its own network plans.

Essar takes 51% stake in Uganda, Congo telcos

The Ruias' Essar Group is to acquire a 51 per cent stake in the telecom operations of the
Dhabi Group, an investment company led by Abu Dhabi's royal family, in Uganda and
Congo for around $150 million (Rs 692 crore).

In Dhabi's Warid Telecom Uganda and Warid Telecom

Congo, Essar Telecom will invest for the growth capital
that will help to enhance network and improve
marketing. Upon completion of the investments, Essar
will acquire a majority stake in both the assets, said the
company in a statement.

The agreements were signed by Sheikh Nahyan Mabarak

al Nahyan, chairman of the Dhabi Group, and Prashant
Ruia, Group Chief Executive of Essar in Abu Dhabi
today. The enterprise valuation of the Uganda and
Congo operations is collectively put at $318 million, said the company.

Already with a presence in Kenya's telecom sector through a brand called 'Yu', Essar is
looking to strengthening its foothold in the rapidly growing African market. Interestingly,
two powerful telecom majors in India [ Images ], Sunil Mittal's [ Images ] Bharti Airtel [
Get Quote ] and Anil Ambani's [ Images ] Reliance Communications [ Get Quote ], have
failed to seal a deal in Africa despite repeated attempts to merge their firms with Africa's
largest player, MTN.

However, another conglomerate, the Tata Group, is expanding its base in Africa through
organic and inorganic routes. Africa's Neotel, in which Tata Communications has a 56
per cent stake, is looking to raise about $1 billion to invest in expansions.

On the stake sale to Essar, Sheikh Nahayan said, "We are pleased to join hands with a
Group that both complements and extends our synergies to expand further into Africa.
Warid has expanded its greenfield operations to become credible competitors and
challengers in the market where it operates; the time is now right for the next stage of its
growth and evolution." Standard Chartered Bank acted as exclusive financial advisor to
the Dhabi Group.

Said Prashant Ruia: "Essar is delighted to partner with the Dhabi Group to expand Essar's
telecom operations in Uganda and Congo. This is in line with Essar's plan to be a part of
the growing telecom market in Africa. This transaction with the Dhabi Group augments
our successful launch of telecom services in Kenya under the Yu brand, which was a
stepping stone for Essar to expand its telecom footprint to the African continent."

In the statement, Essar Group said its investment in Warid Telecom in Africa is a part of
its strategic plans to grow its business there. This deal is a reflection of Essar's plans to
increase its presence in the Middle East and Africa, as it explores business opportunities
by forging partnerships with prominent business groups.

Essar holds a 33 per cent stake in India's major mobile telephone service provider,
Vodafone Essar. MobileStore, a retail chain of Essar, has over 1,300 stores spread across
200 cities in the country. The Group owns Essar Telecom Infrastructure, one of the
largest independent telecom tower infrastructure providers in India. Its Kenyan telecom
arm has over 0.6 million subscribers.

OVERVIEW OF MOBILE OPERATORS

Mobicom, one of Kenya’s largest and most seasoned telecom dealers, has ended its contract with market leader
Safaricom as the battle for control of the mobile phone market takes a new shape with the expected entry of India’s
Bharti Airtel.

The firm, estimated to control nearly 10 per cent of Safaricom’s dealership revenue, ended the nine-year contract and
will instead market the services of rival Zain.
Key players

Safaricom’s 400 dealers handled more than Sh5 billion worth of business per month by September last year 2009–
excluding the M-Pesa business estimated to have been worth more than Sh10 billion per month.
Together with the sale of the wireless internet modems, laptops and phones, the monthly business turnover handled by
the dealers stands at more than Sh20 billion a month, making them key players in the telecoms market.

At Zain, Mobicom becomes the 86th dealer for Kenya’s second largest telecoms operator by subscriber base.
Winning Mobicom – one of the few dealers with a national footprint — to its side offers Zain a much larger sales
platform to spread its footprint and increase visibility in the marketplace.
Rene Meza, Zain Kenya’s managing director, said the company has been talking to Mobicom and other established
dealers for partnerships to help strengthen its distribution network but had sealed no deal.

“Our new strategy is to focus on rural areas and dealers are key pillars to the achievement of such a goal,” said Mr
Meza, adding: “We have been talking to a number of established dealers including Mobicom as they have the
experience and the financial capability to take our products down to the subscribers.”
Bharti, the new owners of Zain, have recently announced plans to spend part of the $150 million they intend to invest
in

Kenya on shoring up their distribution network and improving quality.

Safaricom chief executive Michael Joseph confirmed that Mobicom had terminated their contract with the firm but
declined to comment further.
“I do not wish to comment on this until I understand the reasons behind the move,” said Mr Joseph, who will be
retiring as Safaricom’s chief executive
in November 2010.

A wide dealership network that offers its subscribers access to the company’s products such as airtime and M-Pesa has
been one of the key pillars of Safaricom’s market leadership with 78 per cent of the voice market.
Safaricom has 500 dealers compared to Zain’s 85 for 10.4 per cent of the voice market, Telkom Kenya’s 56 for 5.6 per
cent and Essar’s Yu with 20 for 5.6 per cent.
The operators have been using different incentives to woo and keep the dealers in their stable.

RECOMMENDATIONS
Safarcom is the first successful mobile industry based in Kenya that have captured greater
percentage of market share as a monopoly type company as competitors later on came into the
market to located their base in Kenya looking at the population pyramid for generating higher
revenues on the type of demanding product/services required by people. Financial report indicates
that it is capable of investing on new project that can boost it’s cashflows.

Essar Telecom Kenya (Yu) is not so close to overtakes the market share as a newcomer
in the Kenyan market. They only operate in very few regions with fewer resources that
forces them to come up with various schemes to compete with safaricom so it may be advisable
to invest in extentsion of network nation wide for better generation of market share in Africa.

Essar Telecom Kenya (Yu) has to improve on the area of marketing to target certain
segmentation of market to enhance huge income. They have to go ahead with market
research in order to offer unique services compared to Safaricom to compete in the
market. YU needs to focus on the dealers across the region that are the key players to
achieve their pre determined objectives/goals. Indication on financial statements shows
that YU is not ready to invest on new projects but rather utilize fixed resources that is
available to them currently, in order to succeed YU has to partner with foreign
organizations for them to have sufficient cashflows and resources to compete on the same
level with Safaricom.

REFERENCES

1. ^ http://news.bbc.co.uk/1/hi/technology/6241603.stm
http://www.safaricom.co.ke/m-pesa/
http://www.economist.com/printedition/displayStory.cfm?story_id=9414419
2. ^ Safaricom m-pesa - FAQs
3. ^ http://www.itnewsafrica.com/?p=7804
4. ^ http://www.160characters.org/news.php?action=view&nid=2964
5. ^ http://www.techmtaa.com/2010/06/02/safaricom-launches-mobile-online-chat-and-two-way-email-with-
forgetmenot-africa/service
6. ^ http://www.cio.co.ke/index.php?option=com_content&view=article&id=977:safaricom-launches-
smsemail-service&catid=41:main-stories&Itemid=86

External links

• http://www.safaricom.co.ke
• http://www.safaricomfoundation.org

www.yu-essar.co.ke, www.yu.co.ke
LOVELY PROFESSIONAL
UNIVERSITY

PRINCIPLES AND PRACTISES ON MANAGEMENT

ASSIGMENT: 1

TOPIC: COMPARISON REPORT OF SUCCESSFUL AND

UNSUCCESFUL COMPANIES.

SAFARICOM V/S YU

SUBMITTED BY: ALYASIN A MIRZA

SUBMITTED TO: MR. ROHAN SHARMA

ROLL #: 43
SECTION #: V8004