Safaricom share sheds 2% on Ngumi’s resignation

SafaricomSafaricom chair John Ngumi makes maiden show for company, CEO Peter Ndegwa and CFO Dilip Pal at the firm's investor briefing for H1 2022 results in Nairobi

The price of Kenya’s leading telco, Safaricom Plc at the Nairobi Securities Exchange (NSE) dropped by Sh0.40 on Friday morning, perhaps a reaction to the sudden resignation of the firm’s chairman. 

The counter, which moves close to 50 per cent of total trading at the Nairobi bourse opened the day at Sh23.50, 1.67 per cent less compared to the previous day. 

Although the exact reason for the drop was not immediately ascertained, pundits believe that it is investors’ reaction to the sudden change in the telco’s board following the resignation of John Ngumi as the chairperson, barely six months at the helm. 

On Wednesday, the company revealed that indeed Ngumi resigned both as a director and chairperson on December 22 to focus on developing green energy generation across the continent with an emphasis on green hydrogen.

It also announced the election of lawyer Adil Khawaja as a director to the company, adding that the election of a substantive chairperson will be done in the coming weeks. 

“The appointment was approved on January 5 and is subject to regulatory approval,” a statement signed by the firm’s secretary Kathryne Maundu read in part. 

Adil previously served as a director of KCB Group and was elected the first chairman of KCB Bank Kenya Limited.

The appointment puts him in a pole position to become the next board chairman if the firm decides to go for an outsider.

Stock market enthusiasts say the drop in share price was expected and the future of the stock will largely depend on investors’ views about leadership changes at the company. 

“That was expected today. Investors tend to act cautiously to regime changes. A further negative reaction by investors will be terrible not only for Safaricom but also for the entire bourse,” stock market analyst Jerry Obongo said. 

His sentiments are echoed by investment advisor Mary Abale who reads politics in changes at the firm that controls close to Sh1 trillion of NSE’s market capitalisation. 

“A 40 cents drop in just hours is huge for a firm that commands trading at any given bourse. Let’s monitor investors’ reaction to board changes which to me sounds political,” Abale said. 

Unlike other companies and state agencies where Ngumi served boldly, his short stint at Safaricom was a cold one, especially after President William Ruto’s United Democratic Alliance (UDA) won the August 2022 polls. 

Although elected in July to replace Michael Joseph, Ngumi made his maiden media show for Safaricom in mid-November when the firm announced its half-year results.  

A month earlier, he sat on the bench as his predecessor stole the show during the launch of Safaricom Ethiopia, graced by President William Ruto and Prime Minister Abiy Ahmed.

Efforts to reach Ngumi for a comment hit a snug as he had not responded to our messages and calls by the time of going to press. 

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