Afrigather Kenyan lawmakers have revived the 2022 Data and Communications (Modification) Invoice, which seeks to separate Safaricom, the nation’s greatest telco from M-PESA its cell cash unit. A earlier bid to alter the regulation faltered after solely two lawmakers backed it.
Regulators and lawmakers have pressured Safaricom to separate its enterprise and create two separate entities to cut back its market dominance and permit extra scrutiny. If the invoice passes, Safaricom will probably be compelled to separate M-PESA right into a standalone unit, a transfer the telco has all the time opposed.
M-PESA, Kenya’s largest fee platform, had 31.3 million lively customers from March 2023 to March 2024, processing over $312 billion (KES40.2 trillion) in transactions throughout this era.
“Along with working a telecommunications system or offering telecommunication providers, an individual might have interaction in every other enterprise supplied that such particular person shall legally break up or separate the telecommunications enterprise from such different companies,” says the invoice.
Safaricom has maintained that separating its cell cash enterprise would add no worth to shareholders, resisting requires a break up. In contrast to its friends, MTN and Airtel Africa, which have hived off their cell cash operations, Safaricom has argued that its integration with M-PESA is a strategic benefit.
In 2021, Airtel Cash was separated from its telecom and has since change into the fastest-growing division. South Africa’s MTN Group additionally made the same transfer, closing a $5.2 billion cope with Mastercard afterward.
The Central Financial institution of Kenya (CBK) at the moment regulates M-PESA, whereas the Communications Authority of Kenya (CA) regulates the telco arm. The central financial institution has been pushing for an entire separation to reinforce its oversight of M-PESA transactions.
In Could, Peter Ndegwa, Safaricom CEO, instructed journalists that the corporate will arrange a Holdco in 2025 with divisions of its varied enterprise strains. Underneath the brand new organisation construction, M-PESA, which accounts for practically half of the telco’s revenues, will probably be a subsidiary in the identical enterprise as information, voice, and messaging.
“You’ve seen what Airtel and MTN have achieved. Have they gotten higher valuations? Most likely not. Have they raised more cash? Sure, most likely. Do we want more cash? No, we don’t,” Ndegwa mentioned in Could.
Safaricom has additionally argued that it may face an enormous tax legal responsibility if a break up happens. It mentioned a $582 million (KES 75 billion) tax invoice could be greater than KES52.48 billion in web revenue in 2023.
