Safaricom financial situation

Safaricom is a company that deals with telecommunication services, voice messaging and fixed broad band. The company output can be classified as voice, data and value added services. Voice services include Premium Rate Services also known as third party content service, provide recorded information or live conversation for callers. Safaricom Pre Pay services allow subscribers to pay in advance and freely choose a tariff that suits them. Data services include airtime recharging and sambaza.

Sambaza, launched in March, has enabled subscribers to share their airtime with their friends and family for free. Okoa jahazi and bonga loyalty scheme has enabled subscribers to enjoy advance airtime and to be awarded for their airtime usage . Mpesa service has allowed customers to easily send money through the mobile phones, a very sophisticated technology, and a first in Kenya. Submarine fiber optic, SEACOM, provides high capacity band width for high internet connectivity. To achieve all these, the company has implemented a number of inputs.

It has leased services of several companies as Cellulant, Bernsoft, interactive, Adtel , Mobile Zone and Wasp ,to provide Premium Rate Services to ensure effective live communication between its subscribes and outside world . Ongea 24/7 has enabled efficiency in prepaid airtimes. It has also assisted in dealing in virtual electronic airtime. Safaricom Broadband Modem (Huawei E220) and Safaricom Broadband Router (Huawei E960) has enabled access up to 7. 2Mbps downlink speeds as compared to 236 kbps from other technologies (Michael Joseph, 2009).

The company has developed several technological solutions to deal efficiently and effectively with existing problems. The company has launch the fastest internet connection through the 3G technology known as Safaricom live(Michael Joseph,2009). The company also provides a wide range of services including broadband wireless data (Up to 7. 2 of 2Mbps downlink Speeds), video calls and telephony. It is also signing a deal with a European firm to launch fourth generation technology which will see increase in the speed of internet connection from the current 7. 2 of 2Mbps .

Safaricom has also launched new products and services in the market that the normal ‘Mwananchi’ can afford e. g. bamba 20, bemba bamba and super ongea tariff which is as low as 80 cents. In September, 2001 it launched ATM top up for its pre-paid subscribers to enable top up at teller machine. It has also created technological problem solving techniques. In the magazine by MaryAnn and Chris (2009) the company has created the widest network coverage in Kenya to ensure that subscribers receive clear signal when communicating (p. 35). Business Messaging Solutions has enabled quick and affordable communication to a large audience.

According to Less (2009) Safaricom has a turnover of 70. 5 billion revenues from 61. 4billion the previous year, a 14. 8 % increase, with a market capitalization of 148 billion (p. 18). Safaricom controls the stock market with a listing of 40 billion shares, the highest in Africa. It has an operating profit of16. 2 billion with a profit before tax of 15. 3 billion (Less,2009). Cash of 30. 1 billion from operations remained strong enabling the company to expand its network coverage and ensure that it had a strong network to handle its increasing subscribers. The shareholders fund increased by 19. 9% to 51. billion (Michael Joseph, 2009). The graph shows how the numbers of subscribers have significantly increased as at Nov 2009. Though Safaricom runs the telecommunication industry, it has been faced with stiff competition from other companies as Zain, Orange, Econet wireless, Access Kenya and Wananchi on line. Safaricom has continued market leadership with a control of 79. 1% of the market i. e. 13. 6 million subscribers thus it can be said to be a market price setter. Reduction in GDP growth, increase in margin, Global financial crisis and high oil prices is significantly affecting the company efficient performance.

Less (2009) however shows that there has been an upward movement in revenues by 83% to 12. 9% of total revenue despite of these economic back drops (p. 19). The launch of Jibambie promotion, Jambo Contact Centre and 3G and Wimax data services are some of the events the company marks as having contributed to its success. According to Chris (2009) the launch of M Pesa has been a run way success story, with a current 6. 2 million subscribers and shs 17. 1billion transfer from one person to another as at March 2009 (p. 11).