It is the most profitable business in Eastern and Central Africa, earning profits of over 140 million Euros last year. And now Safaricom, a Kenyan mobile phone operator part-owned by Vodafone and the Kenyan government, has been floated on the Nairobi stock exchange.
Andre Will, managing director of Africa Analysis, says the success of the company is down to a gap in the market: "When you step back and look at telecommunications in Africa, mobile operators have fulfilled a need that the traditional incumbents were unable to fulfil and in all the Sub-Saharan developing markets we have looked at, the mobile operators have done extraordinary well, far better than people predicted and our view is that the mobile has filled a key requirement that has always been there, namely communications."
Thousands of investors from Kenya and the rest of East Africa had flocked to purchase the highly sought Safaricom shares, and it wasn't just big business doing the buying. Small businesses are in on the act.
Michael Joseph, Safaricom's head, has managed to attract some of the country's poorer customers, but how exactly has he made his company so accessible to so many, besides new branding and a pay as you go system? Andre Will believes that the economic picture is deceiving in Kenya and that the informal market is more important than is given credit: "The mobile operators almost legitimise that informal economy and people such as taxi drivers and street vendors do sit with far more disposable income that's attributed to them based on formal analysis and people do have the capacity to invest in a small number of shares."
It was only a few months ago that the country was involved in a political crossfire in which over 1,000 Kenyans died and 300,000 were displaced, but despite this the company has thrived and they're expected to report even better results this year. Andre Wills explains how the company came through the violence unscathed: "When a country does experience some sort of turmoil, one of the most important aspects is the ability to communicate and we have seen information flash around countries very quickly either through voice or sms-ing. The success of Safaricom has not taken place in one quarter however, it's been growing over the years."
Safaricom's gradual success has stimulated other telecom companies to keep trying in Africa including France Telecom, Econet Wirelesss and Celtel so there could be potential threats ahead but in the meantime the message is clear, it can pay off to invest in Africa.
Tags: Africa, business, economy, investing, Kenya, mobile phone operator, shares, stock exchange, telecommunication