Small investors in the nse are in a panic mode, having been highly disappointed with Safaricom shares. Most counters in nse are in the downward spiral and the loud scream of sell sell sell is deafening and in that count the supply of Safaricom shares in particular outweighs the demand almost by 2 to 1. So who is expected to buy the garbage? Smart investors! or Fools!
The answer depends on how you look at the investment and the individual personality. The gauge should be based on some fundamentals but before we go there, let say that although the blood is on the street, there is no need to panic. A recent article on the Business Daily indicated that since the beginning of Safaricom IPO, the economy is facing liquidity crisis. And for that we need to learn a lesson from one man. His ability to invest without falling prey to the fear of uncertainty is what has made him the greatest investor of all time. That man is not me, he is Warren Buffet.
Check the following before you rush to your broker to sell your shares, let use Safaricom as a case example:
The competitive landscape
In the last few years Safaricom have enjoyed domination of the Kenyan market to almost monopolistic level. A fact that has left the rival celtel scrambling with all sort of offers to the the society with queer calling habit. Well there is sign in the horizon that celtel after a long struggle is gaining some grounds and that is a danger sign to the most profitable company in East Africa. By all accounts celtel has superior network and their calling rates are cheaper at the moment.
If the above warning is not enough then the entry of of Telecom and Ecoinonet in the market is a clear cause of worry. The expectation is that the Safaricom market share will be eroded and the days for 17billion profits might be coming to an end. But there is a brighter side. These two companies for sure will take sometime for them to establish their presence in the market, something closer to two years. I guarantee you that Safaricom will still make its billions this financial year and even the year after.
Management Structure
For a better managed companies,there always visible loyal culture of happy and highly productive employees. This is not only critical in their customer service-intensive business, it’s also extremely difficult for any competitor to replicate. In case of Safaricom,this may be both true and false at the same time. But since the company is making those crazy profit the true version holds the water.
All in all as long as Mr. Michael Joseph is still on top, then we expect a better management of the company. The bigger challenge would be to get a worthy replacement. Which a guess is highly possible since we have many qualified Kenyans but in this case a guess it would always be a white dude.
Niche and create something new.
Just when you think there are no innovations left in a certain industry, some company like this blockbuster comes along and changes the way the game is played. Their “new way of doing things” has revolutionized the money transfer. The introduction of MPESA was a game changing idea.For them to remain on top they will need to maintain that creativity. Remember once a wheel is invented people will simply improve it. On that note expect the two new entrants to come up with their versions.
Based on that don’t be fooled, if u have the money buy buy buy buy buy.
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Nice writing. You are on my RSS reader now so I can read more from you down the road.
Allen Taylor
the NSE bearing only follows a now worrying global trend, when the major bourses feel under the weather, we catch a cold down here.