South African telecoms group Vodacom Group Ltd. and Kenya’s Safaricom plc have completed the acquisition of mobile payments platform M-Pesa from Vodafone Group plc. The move that will save the two African operators millions of dollars a year in fees to Vodafone.
In a joint statement on Monday, April 6, the three companies said the change of ownership will give Vodacom and Safaricom full control of the M-Pesa brand, product development and support services as well as the opportunity to expand M-Pesa into new African markets.
“This new partnership with Vodacom will allow us to consolidate our platform development, synchronize more closely our product roadmaps, and improve our operational capabilities into a single, fully converged center of excellence,” said outgoing Safaricom CEO Michael Joseph, in a statement, adding that the management, support and development of the M-Pesa platform has now been returned to Kenya, where the business started.
Nairobi-listed Safaricom is 40% owned by Vodafone and 35% owned by the Kenyan government, while Johannesburg-listed Vodacom is 60.5% owned by Vodafone. Vodafone said the disposal of the M-Pesa brand, support and product development services to Vodacom and Safaricom is broadly financially neutral for Vodafone Group.
Financial terms of the deal were not disclosed, although when the transaction was first announced in 2019, then Safaricom CEO Bob Collymore, reportedly told Reuters it was worth $13 million.
Collymore died in July 2019, to be replaced on an interim basis by Joseph. On April 1, Peter Waititu Ndegewa took over as CEO, according to BoardEx, a relationship mapping sister service of The Deal. Joseph remains with the company as a non-executive director.
Safaricom reported revenue from M-Pesa of 75 billion Kenyan shillings ($705 million at today’s exchange rate) in the year to March 31, 2019, while Vodacom reported revenue from M-Pesa of 3.1 billion South African rand ($171 million). However, Vodacom also reports a potted version of Safaricom’s results under its international operations. It is unclear how much overlap there is between the two M-Pesa figures.
M-Pesa is the largest payments platform in Africa; it has 40 million users and processes more than 1 billion transactions every month. M-Pesa is operational in Kenya, Tanzania, Lesotho, Democratic Republic of Congo, Ghana, Mozambique and Egypt. Currently around 25% of all M-Pesa customers have access to a smartphone – a figure that is growing by 10% every year, according to the joint statement.
Vodafone said the rapid increase in smartphone penetration, M-Pesa’s move into financial services and potential for further geographical expansion, meant the next step in the platform’s African growth would be more effectively overseen by Vodacom and Safaricom.
Vodafone earlier in April said it completed the sale of 100% of Vodafone Malta to Monaco Telecom SAM for a cash consideration equivalent to an enterprise value of €250 million, or 7.8 times 2019 Ebitda and 13.1 times operational free cash flow.