Message from the Chief Executive Officer
We are a sustainable and innovative organisation fully aligned with our purpose of Transforming Lives. This purpose, combined with our use of technology, enables us to develop the products that answer the needs of our customers and provide solutions to the challenges of society. Our adoption of the UN SDGs, nine of which we have integrated into our thinking and our actions, has helped us in making a meaningful impact on the communities that we serve.
We strive to ensure that no-one is left behind – whether it is by the creation of a forward-looking digital society, by providing device-financing platforms such as Lipa Mdogo Mdogo empowering customers to expand their reach and opportunities through the internet, or by working to conserve our natural resources through initiatives such as the planting of one million trees as part of our aim to be a net-zero carbon emitting company by 2050.
Indeed, we strengthen this kind of connection with our communities via the social investments we make through our two Foundations and the brand sponsorships we undertake. These efforts, and the effective operational implementation of our strategy, have enabled us to deliver the strong performance we have.
The strengths of our strategy
The first year of our new strategy, approved by the Board in FY2020, has shown very pleasing results, with the delivery of a customer-obsessed digital organisation, and a solid base for a future-fit Group and significant progress in all business areas.
We have seen equally good growth in our customer KPIs, and a positive trajectory in those pertaining to our commercial activities. With a continued focus on our customers, our mission in the new financial year is to accelerate new growth areas, and to deliver a superior customer experience, in line with our strategic goal of being a purpose-led technology company by the end of 2025.
In pursuing this strategy, we will continue to seek new partnerships as well as mergers and acquisitions (M&A), as we grow into areas with which we are not necessarily familiar – always, of course, in positive and valuable consultation with the regulators.
Our approach to managing risk is intimately tied to our strategy – particularly regulatory risk – as we grow our connectivity business, and execution risk as we expand into Ethiopia. Additionally, we have continued to carefully monitor a deteriorating macro-economic environment – the COVID-19 recovery notwithstanding – with 2022 being an election year in Kenya, and the outbreak of the Russia-Ukraine war. Data threats and cybersecurity are both areas of growing concern, and we remain committed to rigorous monitoring of these issues.
We remain confident in our risk management processes and understand the importance of driving business resilience from a risk-management perspective.
Realising our vision
During the year under review, we successfully transitioned to an agile way of working, centred around a technology-driven culture, with well-developed in-house technology expertise. The key milestones we have reached in this are automation and digitisation across the business, evolving
Other notable successes during the year, as we bridged the digital divide, include 567 new base stations for country-wide 4G service, 800km of fibre cable, and our push to make 4G devices affordable to as many people as possible.
In addition, we have helped customers increase data usage by over 275%, with average revenue per user (ARPU) growing by more than 175%, and with our Lipa Mdogo Mdogo service instrumental in this. Moreover, our Pochi la Bishara platform has grown our business network to the 3.2 million mark.
New products for new growth areas
The combination of strategy and customer obsession has enabled us to introduce intuitive and innovative products, such as Nyoosha Shillingi, a mobile price plan that gives more value to customers at no extra cost; and our Halal Pesa, launched in partnership with Gulf African Bank, which provides Shari’ah-compliant digital financing. In another innovative initiative, we have developed Visa virtual card by
A performance to be proud of:
The results we have delivered in the year speak for themselves:
- Earnings Before Interest and Tax (EBIT), stands at KShs 114.3, billion, as against guidance of KShs 107 billion to 110 billion
- Capital Expenditure (Capex) reached KShs 39.3 billion as against guidance of KShs 40 billion to 43 billion
- EBIT stands at KShs 109.1 billion, as against guidance of KShs 97 billion to 100 billion
- Capex reached KShs 49.8 billion, as against guidance of KShs 70 to 73 billion
We are very cognisant of the need to consider feedback from our stakeholders and to engage meaningfully with them. It is a vital component of our strategy development, as much as it is of our product and services offering. What our customers want, what our regulators require, and what our communities need, is always top-of-mind as we transform into a customer-obsessed, digital-first organisation.
To this end we have done exhaustive research in the market, commissioning monthly net promotor scores (NPS) and maintaining regular and productive contact and consultation with regulators and partners to ensure compliance and responsiveness.
For our employees we undertook extensive surveys, particularly at the height of the pandemic. This was to ensure that they are enabled and empowered to deliver the level of service required, and work remotely, while taking into account their physical and mental well-being. We are also seeking partnerships to help develop technology talent as we transform into a digital-first organisation whose skill requirements are growing concomitantly.
Through our two Foundations we carefully consider our social investments, so that the needs of the community in which we operate are met.
Moreover, as the country’s largest taxpayer, we are very aware of the interests and priorities of government. During the year under review, we maintained the strong and productive relationship we have with government as an important stakeholder. We remain committed to open, transparent and rigorous governance within the organisation, as well as diligent compliance with all legislation and regulation, with the good of the country uppermost in our mutual considerations and consultations.
From the supplier perspective, we pursued shared value, with a commitment to drive diversity and inclusion for both local and foreign suppliers, to ensure that not only they, but the wider communities in which they operate, can benefit.
Our interactions with the Board and shareholders continue on a regular basis, with diligent reporting, and open and transparent communication. Our interactions with the Board and its committees, provides a rigorous framework that ensures the highest level not only of governance but guidance.
The award of the telecommunications licence in July 2021 for our operations in Ethiopia has opened up new vistas for us. With everything now ready for the launch in 2022, we have successfully negotiated the unforeseen and unprecedented circumstances that arose since the award of the licence. While high inflation and forex volatility still remain factors for us to carefully monitor and navigate, we have made excellent progress with support from both the Government of Ethiopia and the Ethiopian Communications Authority (ECA).
This support has enabled the incorporation of the company, securing of approvals for tower development, the building of two data centres, and the landmark making of our first test call, sending our first SMS, and completing our first data session.
With the recruitment of a strong team of over 300, of whom 55% comprises local talent, our goal is to expand to a staff complement of 1,000 in FY2023. We have onboarded 29 distributors, secured four retail locations, and set up our first outsourced call-centre in Addis Ababa.
We have made progress too with Ethiotel in establishing a mutually beneficial partnership for interconnection and transmission capacity, as well as tower and power sharing. In addition, we are in consultation with the Government of Ethiopia on the requirements needed to operationalise our mobile money business in that country.
In the short term, our focus for FY2023 will be on proactively developing a scalable business in new growth areas in Kenya and beyond, with the strategic aim of combining the power of new technology and innovation to grow beyond our connectivity and payment business. To this end our aim is to:
- Leverage mergers and acquisitions (M&A), as well as licences and partnerships to unlock growth and shape our investment profile
- Scale both Fibre to the Home (FTTH) and Fibre to the Building (FTTB) service
- Leverage both fibre and 5G technology with fixed home wireless as our first major use case
- Expand our financial services offering, subject to the requisite partnerships and regulatory approvals, to cover verticals such as insurance, wealth and e-commerce for consumers and SMEs
- Scale selected digital platforms, particularly in AgriTech and Digital Health, as well as establish the right operating model and partnerships to scale Internet of Things (IoT) and Information and Communication Technology (ICT)
- Grow digital services such as content, education and advertising to drive data stickiness and utilisation
I would like first to thank our customers for their support and trust in our business. We commit to continue being obsessed with your needs and to facilitate your achieving your aspirations through our various products, services and solutions. I must of course thank the Board – their wise and diligent guidance, their support for our strategy, and their stewardship of the organisation, are invaluable and essential to our success.
My gratitude goes also to our 6,000-strong complement of employees, as well as all the partners, dealers, and agents with whom we work. The significant ecosystem that they comprise impacts over a million people directly and indirectly is key to the realisation of our strategic goals.
I would also like to thank both the Kenyan and Ethiopian Government for their support in ensuring that we are so well-placed to deliver the foundations for creating a digital business that empowers individuals, businesses and the respective countries in communications, mobile finance and much more besides.
We look forward to continuing to work with all these key people, bodies and institutions as we go forward together into the future.
Chief Executive Officer