The stellar rise of Safaricom’s brand

Posted on May 16, 2014 12:03 am

In March this year, I reviewed a book that chronicled the history of mobile money payment platform called M-Pesa and how it has revolutionized the lives of millions in Kenya.The concept was pioneered by East Africa’s most profitable company and world’s ninth most innovative company according to World respected business magazine, Fast Company, Safaricom is the 9th most innovative company in the world ahead of giants like Samsung, Facebook, Apple and Google. Yesterday, easily Kenya’s largest mobile phone company Safaricom and Kenyan government announced the building of $172 million security communications system geared for fighting terrorism in a country that has suffered more than 90 terror attacks over the past two years. The Kenyan government press release revealed that Safaricom has been mandated with the task of creating the system that will link all security agencies in the country, hence allowing them to share information in real time. The system includes ultra-high definition CCTV spy cameras with facial recognition capabilities to allow security agencies to track suspects. Safaricom will also supply police with sophisticated radio communications gadgets fitted with SIM cards and cameras to be used in capturing images at crime scenes.

Of all the challenges that globalization and technological innovation have brought about, aggressively differentiating oneself in an overcrowded market and competitively positioning oneself amid the ever-growing competition are the two biggest and the Kenyan company has achieved that flawlessly. Telecom industry has a proliferation of products and product variants that boast similar features, competitive prices and enticing service networks. Given such a scenario, it is becoming increasingly challenging for mobile operators to rise above the crowd, attract new customers and sustain customer loyalty. Consider, for example, one of the most talked about industry segments, that of 4G. Until very recently, the market leaders in mobile communications were not among the few brands that offered an upgrade of their systems. However, with smartphone market exploding with unheard of growth and raked in impressive profits that can only be driven with improved networks, telecom operators are left with no option but to upgrade. Given such a keen interest in smartphones among customers, many other companies have entered the 4G market.  From near anonymity in the Kenyan market, Safaricom has emerged as the leader in smartphone sales with close to 2 million of its 21 million subscribers using smartphones and has mind-boggling 98% market share of Short Messaging Services in Kenya.

At the end of last year, Safaricom’s market capitalization was $5 billion, making it the most valuable company in East and Central African region. Many African brands that have emerged as successful global brands, such as MTN have very similar roots to Safaricom. The company has also contracted experts from Huawei to install a new M-Pesa server that will be located in Kenya from Germany. Vision of the CEO is one of the most important ingredients for any sort of corporate success is an inspiring leader. In the case of Safaricom, it would have been an easy decision for any CEO to continue the dominant mind-set of the mobile operator. Although Michael Joseph exit decision turned out to be smooth contrary to what many experts anticipated, Guyana born Robert Collymore has led the company into investing millions of dollars in research, design and marketing in order to further the Safaricom brand. These investments have paid off with its stock price and sales almost doubling and this week their data revenue growth grew by more 40% compared to previous financial year. Active collaboration from being virtually an unknown brand, Safaricom has worked strategically and that has allowed it an entry into the data market and high end contracts that will give it an opportunity to scale up its business of high-earnings, which served as a step toward building the Safaricom brand beyond voice and text messaging businesses.

Legitimacy through association especially through M-Pesa agents has entrenched patriotism among Kenyans. In Africa and all over the world, one of the biggest challenges in creating a new brand is to gain a level of legitimacy in the market. Safaricom has gained such legitimacy through its association with brands like Huawei, Vodafone that partly owns the company and is one of the world’s most iconic brands. Unheard of company more than a decade ago, Safaricom has moved from the periphery of the mobile network operators market to its core by actively investing in and building its brand. In so doing, Safaricom has managed to achieve the dual objectives of aggressive differentiation and competitive positioning. With other telecom companies fighting to catching up fast and the entry of one of Kenya’s successful banking group Equity acquiring the Mobile Virtual Network operators license, it will be interesting to see how Safaricom manages potential market and brand challenges.

Contador Harrison