Connecting Africa is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 3099067.

FinTech

Safaricom & Vodacom Form Joint Venture to Buy M-Pesa Platform From Vodafone

Article Image
Safaricom and Vodacom are to form a joint venture to buy M-Pesa from Vodafone in a $13 million deal.

The Kenyan and South African operators are planning to acquire the brand and the intellectual property of the mobile payment platform from the UK-based group to facilitate the development of new products and expansion into new markets.

Shortly after Vodacom said in the annual report that it would "conclude the acquisition of the M-Pesa brand and platform related assets from Vodafone through a joint agreement with Safaricom," the two companies shared more details, including the price, to the media. According to a Reuters report, the joint venture will be set up and the transaction, with a price tag of KSh1.3 billion ($13.4 million), be completed within a year, subject to regulatory approvals in both countries. Bob Collymore, Safaricom's CEO who just signed a one-year extension to his contract, told Reuters that "given that the bulk of the M-Pesa business is in Africa, between Tanzania and Kenya, it is right for us to be determinants."

An acquisition will also bring significant savings for the two companies. Under current terms, Safaricom pays 2% of M-Pesa revenues to Vodafone. In its last financial year ending March 31, M-Pesa generated KShs 78.1 billion ($770 million), accounting for 31.2% of the company's total income. This implies that Safaricom would have paid Vodafone $15.4 million in royalty covering the preceding 12-month period alone. Vodacom, on its part, pays 5% of its M-Pesa business to Vodafone. In its latest financial results the company reported ZAR 3.1 billion ($210 million) revenue from M-Pesa under the International portfolio, primarily Tanzania, implying a further payment of $10 million to Vodafone.

In addition to the expected savings, by taking over the underlying technologies Safaricom and Vodacom will have more flexibility when developing new products on top of the M-Pesa platform. A recent example of what such products could look like is Fuliza, which provides limited overdraft facilities. The joint venture partners are also planning to take M-Pesa to more markets. Currently, in addition to Kenya and Tanzania, M-Pesa is also available in Ghana, the DRC, Egypt, Lesotho and Mozambique. Outside of Africa, M-Pesa has been expanded to India, Romania, and Albania.

Vodafone owns 60.5% of Vodacom as well as 39.9% of Safaricom.

Wei Shi, Site Editor, Connecting Africa

Innovation hub

Story

Twitter announces first African office in Ghana, begins hiring

Twitter has announced it is planning to open an office in Accra, the Ghanaian capital the first in Africa for the social media giant.

Story

Hot startup of the month: Nigeria's OnePipe

This month's hot startup is Nigeria's OnePipe, which is aggregating APIs from banks and fintechs into a standardized gateway that is easy to integrate and makes partnerships seamless.

More Innovation hub

Industry announcements

More Industry announcements

AfricaCom perspectives

Story

Digital inclusion as a catalyst for economic empowerment: Mastercard's Imelda Ngunzu

Mastercard's Imelda Ngunzu talks to Connecting Africa about how digital payment solutions and mobile money are transforming the lives of small business owners, women and marginalized groups in East Africa.

Story

Accelerating women in STEM: In conversation with GirlCode's Tinyiko Simbine

GirlCode co-founder and CFO Tinyiko Simbine talks about why it's important to help girls and young women excel in science, technology, engineering and mathematics (STEM) fields.

Story

How Poa Internet is unlocking meaningful connectivity in East Africa

Poa Internet's CEO Andy Halsall shares his views on what it takes to develop last-mile connectivity and get Africans online in a meaningful way.

More AfricaCom perspectives

Flash poll

All polls

Latest video

More videos

Upcoming events

East Africa Com
May 11-12, 2021
Virtual Event
Africa Tech Festival
November 8-12, 2021
Cape Town, South Africa
More Upcoming events

Sponsored video

More videos

Partner perspectives

How mobile operators in Africa can address signalling threats and secure the network
By Katia Gonzalez, Head of Fraud and Security at BICS

SD-WAN and satellite how MNOs and telcos can enjoy the best of both worlds
By Ofer Asif, SVP BizDev, marketing and strategy at Spacecom

Africa's mobile operators need better roaming monetization for growth
By Damion Rose, product manager for Mobile Signaling and Roaming Solutions at BICS

All Partner Perspectives

Like us on Facebook

Newsletter Sign Up


Sign Up