Experts downplay effects of changes at Safaricom

Friday, January 13th, 2023 10:20 | By
Safaricom CEO Peter Ndegwa during Safaricom Ethiopia launch
Safaricom CEO Peter Ndegwa. PHOTO/ Courtesy

The latest boardroom realignments at the country’s largest mobile network Safaricom Plc, may not have a wider implication on the firm’s performance at the Nairobi Securities Exchange (NSE) despite the telco shedding its share price to a two-year low.

The controversial departure of its immediate former board chair John Ngumi barely six months into the role may have had a knee-jerk reaction to the firm’s share slide to Sh22.50 on Wednesday, according to equity and non-equity analyst George Bodo. Even though Bodo is convinced that the leadership changes at Safaricom are politically motivated, he doesn’t see the company falter.

“No, not at all. What you saw on Wednesday was a knee-jerk reaction. Safaricom is a big company and whatever happens, top shareholders who are Vodacom and the government of Kenya will have a say, including headship sourcing,” noted Bodo in a telephone interview yesterday. His sentiments were shared by economic expert Samwel Nyandemo who called the changes “mere gimmicks’ whose impact will not impact the firm in the long term.

Nyandemo, however, expects more “heads to roll” in the coming weeks, perhaps months which he noted could touch the top management as well. “It is just a matter of time before you see more familiar faces leave the company,” he offered, consciously not mentioning names.

“This is all politically spearheaded,” he noted. Last week’s readjustments saw Ngumi walk away from the company departing the operator ‘to focus on green energy projects across Africa,’ according to Bloomberg.  He only started his role at Safaricom on August 1 last year. His successor is expected to be named in the coming weeks. “In the brief period following his appointment to the board, John has provided a wealth of industry knowledge and vast expertise.

New administration

 He has steered the Company through a general election and supported the entrenchment of our purpose of transforming lives through our products and services as well as within the communities we serve,” read a statement signed by Company Secretary Kathryne Maundu last week.

Insiders at the telecommunications firm believe Ngumi’s appointment as Safaricom Chairman may have been flagged for political whys and wherefores.

As a result, there was a growing conviction, soon after the new administration came into office, that his appointment could be repealed for the aforementioned red flags for a man that has played key roles in developing Kenya’s capital markets, including his leading role in the development of capital markets regulations.

An investment banker by profession, Ngumi, was described by Safaricom as “one of Kenya’s most celebrated bankers.”

Known as the blue-eyed of corporates, the banker and former Kenya Pipeline Corporation (KPC) board chairman has touted the most qualified replacement for Joseph owing to his prowess in corporate transactions.  His political connections were also felt would suggestively help push Safaricom’s agenda at the government’s decision-making table. His continued absence from the firm’s public events is now inviting mumbles in different quarters.

But several quarters often believed he would not last in that role. “Kenya like America is a presidential system. All appointees of President Uhuru shouldn’t wait for President Ruto to fire and replace them…go before Tuesday. Someone like John Ngumi, Chairman of Safaricom shouldn’t wait to be fired…go tomorrow,” twitted Ahmednasir Abdullahi, weeks before reality dawned.

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