East Africa's Biggest Company Sees Lingering Threat of Break-Upby
Threat of Safaricom being split sends ‘worrying’ message
Safaricom posts 27 percent increase in full-year profit
Safaricom Ltd. is still facing the threat of being broken up as the Kenyan regulator weighs up a report on dominance in the country’s telecommunications industry, Chief Executive Officer Bob Collymore said.
East Africa’s biggest company by market value may resort to court action to prevent it from being split, Collymore, 59, said in an interview Wednesday in the capital, Nairobi. The issue is serving as a distraction for the company’s management and sending “really worrying messages” to investors, he said.
“That noise is still there,” Collymore said. “We keep operating within the law. When necessary we will use the law to challenge judgments or pronouncements which we don’t think are either legal or constitutional.”
The company’s shares fell 2 percent to 19.85 shillings by 11:12 a.m. in Nairobi, valuing the company at 801 billion shillings, after reversing an earlier gain of as much as 8.6 percent.
Kenyan opposition lawmaker Jakoyo Midiwo in February proposed introducing a law to force Safaricom to be split. The proposal coincided with the leaking of a draft report, commissioned by the regulatory Communications Authority, that found Safaricom is a dominant player in the mobile-money and communications sector and unless steps are taken to improve competition, the company should be broken up.
“We are a big player, so you would expect people to take pot shots at you,” Collymore said. “But you would rather they took pot shots based on sound logic and sound reasoning and best practices. We don’t always see that.”
Kenyan Information, Communications and Technology Secretary Joseph Mucheru said in March the government opposes using regulation to force Safaricom to be broken up.
Safaricom, which is 40 percent owned by Newbury, England-based Vodafone Plc, earlier reported a 27 percent increase in full-year profit as income from it’s mobile-money platform M-Pesa and mobile data lifted revenue by 8.8 percent.