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Kenyan Bloggers on Safaricom mystery

The Nairobi Stock Exchange, where Kenyan companies are traded has been on a downward trend in the second half of the year.

Blogger Odegle Nyang narrates Real Lean Times after observing his stockbroker whose “expansion (was) informed by the huge volume of business and euphoria witnessed last year. But now most of their 14 teller booths are empty and those occupying them are visibly bored and yawning.” The brokers blame the downturn on the feeling that an opposition leader, Raila Odinga, could win the elections expected in December 2007 as voters “are ignoring the noise about economic growth, creation of jobs etc.” by the incumbent president.

He observes:

the situation really is grim in the stock brokers front. my favorite standard investment bank had expanded and moved into a new large office in the center of the town. the expansion informed by the huge volume of business and euphoria witnessed last year. but now most of their 14 teller booths are empty and those occupying them are visibly bored and yawning. but standard investment bank still is a good broker and their orders are still executed within 3 working days.

Another Blogger Riba Capital adds that multiple factors are causing the slump with foreign investors are being spooked by the elections and retail investors simply waiting for the initial public offer (IPO) of Safaricom, the country’s largest mobile phone company, which is excepted before the end of the year:

My take, is that multiple factors are coming into play at the same time.
There is the factor of institutional players (fund managers) crystallizing profits for the third quarter reporting period.
Then there is the heightened political situation as various political heavy weights take to the campaign trail making promises and hitting on their competitors from all angles, this factor affects more on foreign participants and retail investors who do not have any major links or contacts with the various political players.
The third factor but of which is not fully fledged is some investors liquidating their positions in preparation for the Safaricom IPO later in the year if all goes as planned.

The market has taken a bit of a knock, with a significant reduction in trading volumes and market prices after it had appeared to be recovering fully from the prolonged drop in share prices earlier in the year.
But this is likely to improve as fund managers mop up shares at discount prices and consolidate their portfolios. My take is that we should also be taking advantage of this time to buy into the stable and sound companies with a sound dividend payment policy.

Mobile phone company Safaricom has risen to become Kenya's largest company with profits of 17 billion shillings (about $250 million in 2006). However, it has been plagued by a mysterious shareholding matter – as the company which was officially declared and to be a partnership between the national landline operator Telkom Kenya (with 60%) and Vodafone – UK (with 40%) has now been found to have a third shareholder – through an unregistered company known as Mobitelea, which owns 5% of the shares.

Here’s a rundown on Safaricom:

Bankelele had earlier opined that the Safaricom IPO could be a crucial vote getter in an election year if it was well managed:

(Premium) Story in the Nation about the Cabinet being presented with a paper to approve the sale of 25% of Safaricom to the public.

This is a winning card this election year that will be foremost in the minds of investors and voters. A well managed Safaricom IPO before December could deliver more votes than needless voter expenditure or rhetoric from any leader.

John Maina places that mysterious shareholder issue on par with other Kenyan mega scandals like Goldenberg and Anglo Leasing:

Many questions are flying around on Whom, How, What, Why, When this mysterious company Mobitelea acquired the 5% which was previously 10%.

A quick background check on Mobitelea reveals that it is registered in Guernsey under 2 nominee companies. Talk about identity protection. Just wonder whether a travel down to this tax haven would reveal much more?

My concern is that having pulled through the Goldenberg and Anglo-leasing scandals, this may be another one in the making.

Coldtusker argues that 10% was stolen and not 5% of Safaricom by the mysterious company:

The crescendo over the, mobitelea stolen indirect 5% ownership in Safaricom, is rising. What many commentators are missing is that it was 10% (not 5%) that was stolen from every Kenyan Man, Woman & Child.

mobitelea – often referred to as moi biwott telecoms of east africa – had stolen 10% but sold 5% in 2002 to its partners in bribery, vodafone, when moi's proxy was going to lose the elections.

The way I figure it out is that Vodafone bought 40% of Safaricom from GOK but had to cough up 10% to mobitelea as “grease” money. A pity but vivendi had to cut a deal with naushad merali (the ty”con”) for the 2nd license.

Mars Group Kenya, an anti-corruption watchdog group, gives a rundown of findings by the Kenyan parliament who looked into the shareholding issue:

10% of Telkom (K) Ltd shares in Safaricom were irregularly transferred to Mobitelea Ventures without the consent of Treasury and that of the parent ministry according to the Fifteenth Report of the Public Investments Committee on the accounts of State Corporations 2007. The explosive Parliamentary Committee Report on Public Investments wants the Director of KACC to immediately institute investigations on the circumstances and manner in which the shares were transferred to Mobitelea with a view to taking appropriate action against any persons found culpable. The PIC also wants the Director of KACC, to include a progress report on the investigation in the Commissions quarterly report to the House for the next immediate period.

Wikileaks publication of a report from Kroll Associates sheds some light on who the shareholders may be.

However, Pesa Tu argues that the mystery shareholder is a non issue as far as Kenyan IPO investors are concerned, since Vodafone (UK) is the only aggrieved party to a private dispute with Mobitelea. He explains why the IPO must go on:

Why the IPO must go on
The Safaricom IPO will ignite significant foreign interest that will grow our markets and put Kenya in focus of all the top markets.The market Growth will create more jobs for everyone and grow the economy.

If we stop the IPO we can get back Mobitelea's stake
Ha, Not a chance the Mobitelea stake is parked in a private company Vodafone(K) Ltd.Government cant interfere with private property that is unconstitutional
Let me put the point across using a story:
There was once an old mzee who had 10 acres of land.He sold 4 acres to his Best Friend.The Best Friend then sold 1 Acre to a stranger the Mzee didn't like.The Mzee wanted that particular 1 Acre(that was sold to the stranger back).Do you think he got it ?

This is unfair Mobitelea's owners are getting away with free money
Life is unfair that why some people have first class degrees and are clerks while others have Certificates and are millionaires.Thats the case whether in USA or Kenya.

2 comments

  • Safaricom’s IPO over-subscription is a classical case of the pent-up desire of Africans to demonstrate their appreciation for worthy investment. Telco businesses are the most profitable in African continent, even with the huge CAPEX, the average margin per user is relatively high compared to the world’s average. Africans will like to put their money where their mouth or voice is because each call they make is a call of wealth

  • […] is the 5 – 10% owned by Mobitelea, which has been extensively discussed in the media and among blogs. However it would be surprising if that shareholding still existed, and surely that embarrassing […]

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