SAFARICOM TO BE SEPARATED FROM MPESA

Safaricom #ticker:SCOM will not spin out the lucrative M-Pesa unit into a stand-alone business, bucking the trend by other telcos such as Airtel Africa and MTN Group.

The telco says that it wants to retain the connection between its business lines and to ride on data analytics to grow revenue as opposed to breaking up the company.

Safaricom CEO Peter Ndegwa says the firm is therefore opposed to the Kenya Communication and Information (Amendment) Bill that proposes firms to split their telecommunications business from the mobile money transfer and lending units.

“Our intention is to continue to operate our business as a combined business; we see significant synergies between our two businesses. With respect to Airtel or MTN, it is not our intention to go in that direction,” said Mr Ndegwa.

“There are significant synergies and dependencies especially from a customer perspective. We do see as significant data, big data and analytics opportunity for us in keeping the two businesses together.”

The stand is in contrast with international players such as South African mobile operator MTN Group which is mulling spinning out its fibre and financial services units and possibly list them on stock market.

M-Pesa returned revenue of Sh82.64 billion in the year ended March, surpassing the Sh82.55 billion from the traditional voice business, highlighting the growing stature of the mobile money business line.

Safaricom launched M-Pesa in 2007 and has been using the service to unveil new services and innovate the existing ones, leading to increased usage.

Started as a person-to-person cash transfer service, the platform has now grown to offer payments, credit, international remittances and business analysis and support. Safaricom and its South African parent company Vodacom acquired M-Pesa platform from British firm Vodafone at Sh2.146 billion, forming -Pesa Global Services Limited as a joint venture.

Mr Ndegwa says the deal allows it to look at M-Pesa at a regional level, develop platforms to take advantage of future opportunities and also drive innovation within Safaricom.

By Business Daily

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