2007: My Twelve Reflections

As the year draws to a close with the upcoming general elections many especially in the business cycles are taking stock of their ups and downs during the year.

1. The stock market during the early part of the year was abuzz and on a crazy upswing mode and many investors did make a kill.
2. New entrants into the stock market exclusive leage-Renaissance capital is already making inroads into the equity market with plans to invest more in stocks come the next years.
3. New IPOs slated for the year were realized but the mother of all IPOs is still being awaited and investors are bracing themselves for a bruising battle come the release. Despite the dragging court cases the governement is still determined to sell this cashcow and seal the deficit hole in thw budget that is over Kshs100B.
4. The shilling realized significant gains and is now on new highs with strong inflows from:
-Shs 26B purchase of 51% stake in Telkom Kenya.
-Transcentury continues to spur investment area with its new ideas from the spindoctors therein. It is now selling its shares to the strategic investor.
-The prospects of the dollar on the global front is dwindling
-Foreign investors flock to the NSE to get a stake in some of the blue chips and Kenya is the new emerging market where foreign investors are diverting their investments.
5. Equity continues to surprise us despite fears of imminent collapse with new profitability feats and innovative product and now the sale of 24.9% stake to Helios-a strategic partner. What more can we say it is going from strenngth to strength and their stocks might be worth your pennies...
6. The banking sector was abuzz with profitability and more is yer to come.These stocks are good buys dont you think?
7. The emergence of the pyramid schemes that fleeced many investors their hard earned monies and left many crying remember Deci, CLIP, Sasanet and many others?
8.Many investors woke up to the realization of the stock market as an investment destination.
10. Tourism earnings and prospects are good and the earnings from this sector are set to rise exponentially come the next year.
11. The economy grew by over 6% and whether this translated to more money in our pockets is subject to discussion.
12. Business Process outsourcing (BPO) the new craze in town for kenya as an emerging market and this is expected steer our country to the leagues of India and other fast growing economies.

more to come.......

The Hot Seat that is Safaricom CEO

Being the CEO of Kenya'a most profitable company is no mean feat and many corporate CEO's are now envious of their unparalleled achievements and would wish to occupy this higher pedestal.

Safaricom's CEO

Michael Joseph has been at the helm of Safaricom since inception and with his contract coming to an end in the first quarter of 2008, picking the CEO of Kenya’s most valuable and successful company would appear as a big political concession that any regime would like to lose.

Succession Plan

Mr Joseph has been an asset to the firm, which has not put in place a well thought out and well publicized succession plan. The risk of losing a successful manager at a time when the company is preparing to go public would have made investors skittish. more

Syndicated Loans

Safaricom owes a syndicate of banks Sh12 billion and with the fast growth that the company is experiencing, it still needs the ability to tap both the equity and debt market for cash.

IPO

Treasury is seeking to sell 25 per cent of its 60 per cent stake in Safaricom to the public through the NSE in a transaction expected to net at least Sh34 billion and billed as the largest sale ever in the Kenyan capital market.

Telkom Kenya

Already, a number of investor including British Telkom, France Telkom and South Africa Telkom have lined up to purchase a 51 per cent stake Telkom Kenya in deal worth Sh5.6 billion. The stake is set to be transferred to the winning bidder on November 26th.

Business Process Outsourcing; An Idea for 2007/08

Over the weekend amidst my weekend escapades i managed to squeeze time and attend a talk by some of the creme-de-la-creme of our society who have been instrumental in their areas of engagements. The weekend saw me attending a business and investments forum addressed by The Investments Secretary Mrs. Esther Koimett, PS ministy of Planning Dr. Edward Sambili, Top CBK Directors, Business Moguls, Entrepreneurs, Young Upcoming Business leaders amongst others.

At the end of the forum i thought it would be prudent if i share the same with my avid readers.

Highly potential sectors:

In their address the emphasis was on the key sectors that are likely to rake in millions in the next few years and any proactive business minded person may wish to venture. These encompass the Information Communication Technology (ICT) sector, Tourism, Financial Services Sector, Service sector, Construction, Agriculture, Capital Markets, Business Consultancy and Supplies and Services/Procurement.

Today i wish to talk about the new craze in town-Call Centers- Otherwise under the umbrella of Business Process Outsourcing. It is noteworthy that the advent of the ICT technology has seen the emergence of various technologies that are expected to change the way business will be conducted and correspondingly enhance economic growth and development. The issue of Business Process Outsouring (BPO) cannot be gainsaid as this was instrumental in the rapid growth and turn around of the Asian economies expecially India, Phillippines, Eastern Europe as well as in South Africa and Egypt.

Business Process Outsourcing (BPO):

Business Process Outsourcing (BPO) is the contracting of a specific business task, such as payroll, to a third-party service provider. Usually, BPO is implemented as a cost-saving measure for tasks that a company requires but does not depend upon to maintain its position in the marketplace. BPO is often divided into two categories:

-Back Office Outsourcing, which includes internal business functions such as billing or purchasing, and

-Front Office Outsourcing, which includes customer-related services such as marketing or tech support.

BPO in India:

The BPO industry in India refers to the Services Outsourcing Industry catering mainly to Western operations of Multinational Corporations.The sector witnessed considerable activity during 2004–05, including a solidifying of operations by major Indian and MNC players and stepped up hiring. The domestic BPO market, catalyzed by demand from the telecommunication and Business Financial Services segments, matched the growth of BPO exports. The market experienced maturity and consolidation, a result of numerous mergers and acquisitions taking place within the sector. There were over 400 companies operating within the Indian BPO space, and third-party services providers. The key enabler for this has been cheaper bandwith leading to low telecom costs for leased lines and availability of educated English speaking workforce in India.

India's Challenge:

India’s BPO sector is facing increasing challenge from Kenya and other East African countries. South Africa also plans pose a strong challenge. The main daunting problem for India especially in Bangalore and Chennai is low quality in BPO services.

Other Emergent BPO Centers:

India has revenues of $6.4 billion from offshore BPO and $36 billion from IT and total BPO. Apart from India, other locations like the Eastern Europe,Phillippines, and South Africa have emerged to take a share of the market. China is also trying to grow from a very small base in this industry. However, while the BPO industry is expected to continue to grow in India, its market share of the offshore piece is expected to decline.

Call Centers:

Africa's call center industry is set for major growth and are deemed to gain popularity and preference over Indian operators, with South Africa and Egypt leading the charge thanks to cheap labor, good language skills and time zones that chime with Western Europe. South Africa, which is favored by British companies for its cultural affinity with Europe, call center positions are expected to more than triple to 7,400 by 2010. Egypt also continues to impress western investors with its mix of savvy and linguistically-talented agents.

Indeed, countries that have made improving IT and telecommunication a priority, like Botswana, Kenya, Senegal and Ghana, are ripe for growth.

Kenya--impeded in the call center industry to date by poor communications links to the rest of world--is banking that the first fiber-optic cable in east Africa to be laid by mid-2008 will boost its status as the region's top economy. Many Kenyan entrepreneurs hope that this, plus cheap labor, clear accents, and customer fatigue with Indian call centers could help the African country hook into the burgeoning call center and outsourcing Industry, worth $130 billion worldwide.

Fiber Optic Cables in Kenya:

The laying of the fiber optic cable has been on with Telkom having unveiled the long haul Mombasa-Nairobi fiber optic cable measuring nearly 500 km as the state-owned company readies for stiff competition from other players as Kenya Data Network (a company associated with the billionairre Naushad Merali and his Sameer Group) that is also eying the under sea fiber optic cable system. Telkom has introduced a new broadband wireless platform -- Kenstream Wireless -- to complement the already existing Kenstream services.

Kenya Call Centers:

Kenya's endeavor to drive down telecommunications costs to tap into the multibillion dollar outsourcing industry and make Kenya an information technology hub is welcomed in bringing Kenya into the fiber optic loop. Kenya's nascent call center business has grown from employing 200 people last year to 3,000 this year, despite relying on expensive satellite-based communications. To get more companies to give their business to Kenyan call centers, the country needs to increase its bandwidth up to 500 megabits per second by year's end and subsidize the cost until a submarine fiber optic cable is working.

Kencall:

Kencall is a premier call center established in Kenya that is already making inroads into the highly competitive Business Process Outsourcing industry despite the infrastructure challenges to their efficient operations. KenCall, being one of the country’s premier call centres, has defied the odds to win a global award in back office operations business, beating rivals from the infrastructure-enabled markets such as India and the Philippines.

Kencall has 500 agents and 5 international clients and has been at the forefront of an emerging outsourcing industry in Kenya, and is hungry for more growth.

Future 0f Call Centers:

Statistics shows that some 3,000 Kenyans now work in call centres, with the outsourcing sector encompassing about 30 companies. KenCall and 3 others dominate, industry players say. KenCall wants to treble its number of agents by the end of 2008. more

The future of call centers is bright with possible reduction in telecommunications costs. Further, with intense maketing likely to go on and a new focus by western companies on Africa (Kenya Included) It is time we take the responsibility to invest in call centers and MAKE MONEY!!!!!

May the Real Owners of Safaricom Stand Up?

Real Owners:

The past few weeks, the local media has been awash with details that the Public Investments Committee (PIC) wants the government t0 institute proceedings to establish the real owners of Safaricom one of Kenya's most profitable telecommunication company that raked in 17B pretax profit for the last financial year. Information available at Safaricom's web show that its sharehodlers are Telkom Kenya and Vodafone Plc.

5% Stake:

This parliamentary watchdog wants the much anticipated Safaricom Initial Public Offer (IPO) slated for latter this year shelved due to the failure by recent investigations to unmask the owners of a shadowy company with a 5% stake in Kenya's most profitable firm.

This therefore means that the planned sale of 25% of Safaricom shares to the public through the Nairobi Stock Exchange that was anticipated to raise close to 34B may be put on hold until the owners of Mobitelea ventures are known.

Mobitelea Ventures:

This is a shadowy company that is alleged to own 5% of Safaricom though the company CEO was quick to scoff at the report claiming that the reals owners of the company are Vodafone Plc with 40% and government through Telkom Kenya with 60% shareholding. The report says that in 1999, Telkom Kenya owned 70% of Safaricom Ltd while Vodafone Kenya Ltd owned 30%.
Mobitelea Ventures Ltd is a firm registered in Guernsey Island and whose directors are obscure through other nominees. The firm owned 10% in 2002, which was reduced to 5% in 2003 when Vodafone Plc "bought" back part of the shareholding.

Registrars:

However, the evidence available from the office of the Registrar of Companies indicates that Safaricom's authorised share capital is 1,000 with;

-Vodafone Plc having 40%

-Telkom (K) Limited 60%

-Messrs Paul B. Julan, John K. Mosonik, Augustine K. Cheserem, Ashwini Bhandari, Kenneth Hamish Keith, each had one(1) non-participating share.

Shoromo Ltd:

Last year, it emerged that in February 1998, when Vodafone Plc entered the Kenya, the UK firm had used a pseudonym Shoromo Ltd and only changed its name to Vodafone Kenya Limited on October 15, 1998. More...

For the clearly illustrated shareholding structure check out pesa tu blog.

Scheme:

Many think the claims that the shareholding structure of Safaricom cannot be clearly identified is a scheme to defraud the public. Although as a requirement, companies intending to issue shares through an IPO through the Nairobi Stock Exchange (NSE) should reveal all the fundamental information, including shareholding, that would influence any investors purchase of the shares, this remains to be seen. Kenya Re didnot reveal the details of the forensic audit report claiming that it was sub judice to the court proceedings on the same only making them available for inspection at the company premises which many may not bother.

IPO still on:

The Government has said the sale of Safaricom shares to the public will go on, as scheduled, despite recommendations to shelve it by a parliamentary committee last week.

Rennaissance Capital Now sets Shop

License:

Europe's leading investment banker, Renaissance Capital, Tuesday received a license to operate as a local investment bank in Kenya and said it would to target Zimbabwe and Nigeria as one of its key markets in Africa.

Major Investment Bank:

Renaissance Capital is a leading investment banking firm in Russia, Ukraine, Central Asia and Sub-Saharan Africa. The company has market-leading positions in each of its core businesses – -Mergers & Acquisitions

- Equity and debt capital markets

-Securities sales and trading

-Research

-Derivatives

The company is wholly owned by employees and management and is part of the Renaissance Group.

Rennaissance Group:

Renaissance Capital is part of the Renaissance Group, an independent group of consumer finance, investment banking, asset management, merchant banking companies specializing in emerging markets. The Group began operations in Russia in 1995 and has since become the largest privately owned investment group.

Stephen Jennings, Renaissance Chief Executive Officer, said here the Kenyan license allowed the firm to set up its Africa regional headquarters in Nairobi, from where it invest an initial sum of 1 billion U.S. dollars in Africa's telecommunication sector.

Peek on fellow Bloggers and Newsportals:

Investors are waiting to see what these new kid on the block will bring to the stock market. Read out bankele's analysis of the new stock broker.

As various companies release their financial results the banking sector has realized some all time highs. Those who have released their results include Equity, KCB, BBK, NIC amongst others. Read more and the incisive analysis by Mjengakenya.

Standard Chartered Bank Kenya has reported a 21% increase in half-year pre-tax profit. The bank posted a Sh400,000 rise in its profitability to hit Sh2.3 billion, up from Sh1.9 billion over the same period in 2006 to be the second most profitable bank in Kenya after Barclays.

BBK PLC is bidding for ABN Amro Bank in Europe with sweet offers to Amro's shareholders.Read Kainvestor'a blog on this here.

Telkom Kenya rattles the big boys in their game with only a few months into its wireless operations that has attracted close to 150,000 subscribers and growing. Its targets are immense and its only a matter of time and they will be in the same league as Safaricom and Celtel. How about their profitability and sale of its 51% stake? The companies said to have bidded include, India’s Bharti Airtel, Reliance Communications and the Tata Group all for the 51 per cent in state-owned Telkom Kenya. Time will tell after a conference recently for the tenderers to buy the stake.

Confidence in the Nairobi Stock Exchange remains high despite a recent market correction and loss by investors of more than Sh80 million in the collapse of a brokerage firm.

Price Wars at Telephony Industry

Cut throat competition:
It is now very evident that there is a cut throat competitition amongst the telephony industry players with everyone striving to remain relevant, absolutely cheaper and relatively preferable to the other party within the growing industry.

Celtel and Safaricom:
Earlier it had been evident that the two main players in the GSM commucation; Celtel and safaricom had been at loggereheads as price wars intensified. Safaricom with over 5M Subscribers recently made headlines with its substantial profit margins amounting to 17Billion, the only feat in this region of the world and may be quite unparalleled in Africa as well. Celtel on its part has close to 3M subscribers and is striving to increase that number marginally as well. Now Telkom Kenya has joined in the fray and is busy unveiling competitive tariff structures aimed at making the cost of telephony services affordable to the consumer.

New Tariffs:
The new tariffs launched by Telkom are: Furaha, Thamani and Shikamoo as well as a credit sharing service called Pasha as well as an SMS service.

CDMA Technology:
Telkom in its current onslaught on the industry is using the 3rd Generation System referred to as the Local Loop/CDMA i.e. Code Divisibole Multiple Access Technology. The Technology has 390M Subscribers and is currently used in 21 countries around the world.