Kenya’s top mobile phone carrier Safaricom has big plans for the future. In its pipeline is a plan to put its business in a regional map amid diversification processes that have seen the telco branch into various business portfolios such its incoming eCommerce venture, improved payment solutions for merchants and music streaming services.
Safaricom has been doing well and as of August 29, its market capitalization clocked in at $10.5 billion when its share price reached KES 27.25, although that value has since gone down by 9% thanks to nullification of the August 8’s presidential elections. Nonetheless, the telco has a lot of cash at its disposal, and this surplus has made industry experts predict Safaricom’s venture in Eastern Africa’s largest economy, Ethiopia. However, this move faces a fair share of challenges based on Ethiopia’s non-competitive guidelines that have banned foreign telecommunications industries from setting up their business in the country.
According to the Financial Times, Safaricom CEO Bob Collymore admits that other countries are seeing Safaricom as threat if it establishes its business as a mobile operator. Thus, Safaricom wants to diversify its trade on foreign soil with eCommerce that it believes no other player has managed to successfully deploy.
Masoko, which is yet to go live, will take Alibaba’s operational philosophy rather than Amazon’s. This is to say that Masoko will combine mobile payment with e-retail, which differs from Amazon that has an inventory system for managing logistics. On the whole, Masoko will set itself apart from inventory-based eCommerce businesses operating in Kenya such as Jumia and Kilimall.
Safaricom’s move to enter other African countries will be financed by its telecoms business.
“In two to three years’ time we will be in four to five African countries. I don’t think we’ll step out of Africa because that’s too far and you have lots of other challenges,” says Collymore.
What’s more, Collymore says that the expansion has been actualized after South Africa’s Vodacom paid $2.6 billion for a 35 per cent stake in Safaricom a few weeks ago. This will pave way for Safaricom to take its business to outside markets that were held by Vodacom.
As we reported earlier, Safaricom’s Masoko ecommerce platform wants to leverage Safaricom’s funds, in addition to mobile payment options like Lipa na M-PESA online to have an edge over Kilimall and Jumia. Launching this service in other countries is evidence of Safaricom’s zeal to topple these platforms out of their comfort zones, although Jumia is cushioning itself from Masoko’s impact.
With its resources ranging from customer data to lost of money, Safaricom has the potential to pull this move off.