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Man behind senator Keg to steer Safaricom in its next growth phase

BUSINESS
By Macharia Kamau | October 25th 2019
Mr Peter Ndegwa joins Safaricom from Diageo, a global leader in the alcoholic beverages business, where he is currently serving as Managing Director of Continental Europe.

A Kenyan is finally set to occupy the corner office at Safaricom House’s seventh floor after the company appointed Peter Ndegwa as its chief executive.

The appointment comes after months of a push and pull between the two largest shareholders, Vodacom and the Government, over a suitable candidate. Various senior State officials had expressed their preference for a local to steer the region’s most profitable company into its next phase of growth.

The telecommunications company yesterday said Mr Ndegwa would take up the CEO position on April 1, 2020.

Interim capacity

He was picked from Diageo, the UK-headquartered giant alcoholic beverages firm, where he was the managing director for continental Europe, overseeing Diageo’s operations in 50 countries in Western and Eastern Europe, Russia, Middle East and North Africa.

Ndegwa previously worked with East African Breweries Ltd (EABL), and is credited with being a key member of the team that came up with the low-end beer, Senator Keg, one of the brewer’s best-performing brands.

The University of Nairobi economics graduate, who also holds an MBA from the London Business School, will take over from Michael Joseph, who stepped in on an interim capacity following the death of Bob Collymore in July.

“The Safaricom Board of Directors is confident that Peter will carry on our vision of transforming lives while keeping us focused on meeting our customers’ needs and holding us to our new commitment of being simple, transparent and honest,” said Nicholas Ng’ang’a, who chairs the board.

The hiring of Safaricom’s chief executive is an arena for fights between the Government and its co-owners, South Africa’s Vodacom.

Special resolution             

Earlier reports had indicated that Collymore had been getting extensions as CEO because the two shareholders could not agree. At some point, the board conducted interviews, including with local corporate bigwigs, but settled on a Vodafone official. This decision was reportedly opposed by the Government.

Foreign shareholder influence is, however, expected to wane following a recent move that guarantees that a majority of board members will be Kenyan. In August, shareholders voted in a special resolution that gives six out of 11 director positions at the board to Kenyans.

Ndegwa will be taking over at a time when the company is increasingly facing uncertain times.

While Safaricom remains the largest telco in the country, it has in the recent past seen its share of the market decline. According to recent data from the Communications Authority of Kenya (CA), the firm’s share of the market is at its lowest in years, at 63.5 per cent as at July this year. Its rivals, especially Airtel, have grown their subscriber base over time to about 25 per cent.

Ndegwa will also have to confront the calling patterns of his customers, who are not eager to make calls due to prohibitive costs.

Rival networks

CA, in its quarterly report on the industry, noted that Safaricom’s subscribers spend the least amount of time making calls, at an average of 1.2 minutes for on-net calls, while subscribers on rival networks spend as much as 3.5 minutes.

The firm is also dealing with the push from its rivals and the industry regulator to implement the recommendations of a dominance report, as well as proposed laws that could require the firm to hive off its mobile money business.

But the Safaricom board says Ndegwa is capable of navigating this terrain, with a record that includes substantially growing Diageo’s operations in Nigeria and Ghana, where he was chief executive between 2011 and 2018.

The certified public accountant led the “two operations to deliver double-digit growth by investing in people, introducing new brands and reorganising the businesses when he was appointed to head Diageo’s operations in Europe”.

Additionally, as strategy director at EABL in 2004, Ndegwa’s profile shows he played a key role in untangling the complex relationship that the brewer had with its bitter rival SAB Miller (now ABI) in Kenya and Tanzania.

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