Wednesday, July 08, 2009

How Safaricom can adapt Vodafone's investor relations


old safaricom logo incorporating vodafone


Safaricom have done a great job in terms of dealing with investor relations since its listing; they have also said there won’t be any SWAG for shareholders at their August annual general meeting (AGM).

But there are things that Vodafone can do that can enhance shareholder value beyond giving mere t-shirts and lunch boxes. As 40% owner of Safaricom, Vodafone can drive many things about investor relations. Consider that while Safaricom is considered to have too large a register with 831,000 owners, Vodafone is not too different with 551,000 shareholders - 440,000 who own less than 1,000 shares, and just 46% presumed to reside outside the UK. Despite the numbers, the Chairman's letter invites as many shareholders to attend the meeting and participate (and probably ward of any hostile resolutions)

So here are 10 things Safaricom borrow from Vodafone to enhance shareholder relations in lieu of SWAG:

1.Have an enhanced agenda and promote shareholder participation in management. Many NSE companies do the bare minimum asking shareholders to adopt accounts, approve auditors and re-elect 1/3 of directors – that means an AGM can take 15 minutes which leaves the floor open for the nonsense questions. With a ‘fatter’ agenda shareholders won’t have time to ask for trivia. Newer companies like Access Kenya, Equity, and Scangroup are more pro-active with the management of their companies. So decisions on acquisitions, fund-raising, are common on the agenda. Another examples is executive compensation: many companies ask shareholders to approve creation of employee share options plans (ESOP’s), but then leave the computation and awarding of benefits to trustees (another set of directors); at Vodafone, shareholders know and vote how much current CEO Vittorio Colao, and former CEO Arun Sarin earned, so why not let the shareholders know how much Michael Joseph and the directors earn per year per meeting etc. Can’t handle that? Uganda companies can do that. Also at Vodafone all directors retire each year, which should ensure a robust re-election session.

2. The complete 2009 Safaricom annual report will only be given to those who request it, to save costs. It will be downloaded from the website. So let’s have a interactive report so investors can choose to download video or just sections they are interested in e.g. the notice only. Same with the memo & articles

3. Promote a alternative methods for shareholders’ to enhance value. Support a dividend re investment program (DRIP). Not everyone wants an M-Pesa dividend; some may prefer to buy 100 more shares in the company instantly, while the shares are still cheap (Kshs. 3.7 or ~$0.05 per share) and a DRIP will be a useful tool that keeps cash within the company and its owners. Alternately, if feeling philanthropic, Vodafone shareholders may donate their meagre shares to a charity - and why not to a school in Kenya that was Tahidi High last night!

4. Broadcast a webcast of the AGM - this will be a showcase for safaricom’s broadband capabilities and will be enable foreign investors to participate. If not ,broadcast it on TV so people don’t have to travel to Nairobi from other towns and can watch have it from home – NTV or Citizen would cover the mid-morning event up to the 1PM news

5. Promote alternative voting ; by e-mail, by telephone, by mailing in the post; mail-in happens in Kenya, but Kenyan investors feel they have to be there, to vote which is not the case.

6. Send investors information by phone (SMS) or e-mail. Safaricom is a mobile phone company; they send trivial messages to advertise products, so why not also quarterly results by phone? And for those of us at the next level, why not Safaricom twitter ? Join @kenyaairways and @jimmykibaki (:_}) on the new media wave

7. Don’t leave everything to the share registrar: On the website, shareholders can track their shareholding, change their address, and change their dividend payment option. At the meeting have a shareholder help desk – already a common feature at bank AGM’s (Equity, NIC) but to help them transfer their shares to the bank. Online information use was a feature deployed during the IPO, but that information is sitting un-utilized in a server somewhere

8. Pre-empt shareholder questions with a FAQ. Compile a list of frequently asked questions with appropriate answers, put them on website, or hand out flyers for those who attend meetings.

9. The Vodafone site warns investors about boiler room tactics and cold callers after their shares. So why not tell shareholder which brokers are misbehaving? Which to use and not to use?

10. Vodafone governance policy calls for disclosure of any political donations (and for Safaricom if any) – it has been noted here that the company tends to have increased corporate social responsibility activities in the home areas of the sitting information minister

11. Oh, and finally Tea & coffee will be served at Vodafone AGM

7 comments:

peter said...

FIRST HOW MUCH DYU THINK THEIR TEA AND COFFEE WILL COST? SECOND. THAT JIMMY KIBAKI ON TWITTER IS AN IMPOSTER... AS IS THE ALFRED MUTUA.... CRANK POTS...

Anonymous said...

Why is EABL giving business to foreign firms? How will this affect Scangroup share price?

http://www.campaignlive.co.uk/news/917219/AMV-beats-Arnold-Lowe-Scanad-Tusker-lager-account/

AMV beats Arnold and Lowe Scanad to Tusker lager account
by Claire Billings, campaignlive.co.uk, 01 July 2009, 3:10pm
LONDON - East Africa Breweries, the Diageo-owned brewer, has appointed Abbott Mead Vickers BBDO to handle the advertising for Tusker, Kenya's biggest beer brand.


AMV triumphed in a three-way pitch involving Havas-owned Arnold and the local WPP agency Lowe Scanad to the business.

The agency has been briefed to create an overall brand idea for Tusker while Lowe Scanad will work with Tusker on local implementation of the campaign.

Activity is expected to run on TV, outdoor and other communication channels as Tusker increases investment in the brand with campaigns in East Africa markets such as Uganda, Tanzania and Ethiopia.

Debra Mallowah, the East Africa Breweries marketing director, said: "We know that AMV are strong communication partners with a great track record on beer - we have been impressed with the commitment and insight they showed in getting to grips with our beer, our ambitions and our consumers."

SportsKenya said...

I couldn't agree mo Bankel...most AGMs have become so monotonous and most directors seem like they want to get over and done with it in mins showing contempt to the very people who enable them hold those posts.
I liked the no-frills AGM-no food packs and such goodies, sending dividends via M-Pesa...most shareholders devalue the very essence of an AGM by appearing for the goodies and leave even without getting any relevant information about their companies.
It's also time NSE-listed companies used technology for their AGMs. That way you will attract not just serious questions from investors and media but also set benchmarks as a leading solutions and innovative company, can't wait to attend this !

MainaT said...

Just start with far better and simpler disclosure. In that respect, Vodafone is not the best given its aiding and abetting of various corruption deals under the cover of confidentiality. Barclays (also with similar history), has really moved on disclosure. For 2008, its even attached a spreadsheet for the pedantic like me who like cross-checking the figures.
http://www.barclaysannualreport.com/ar2008/index.asp?pageid=88

The corporate governance part doesn't work when done on a voluntary basis. Remember employees are a competitive advantage in some industries so showing sals may not be prudent.

Investor education would be useful and weed out the swag-hunters via sheer boredom

Village Analyst said...

Banks: you are spot on! If there's something that's neglected post-listing, Investor Relations is it.
Even this great communications company is not harnessing the power of the internet like we'd like to see it do.
Just a by the way; Africa Paractice is one of the few companies venturing into Investor Relations consultancy. (africapractice.com)

kenyantykoon said...

nice post. i hope michael joseph reads this

http://kenyantykoon.wordpress.com/

Aidan said...

Very Good Job and keep up the good work.
UK investor relations

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