Safaricom together with its South African parent company, Vodacom, are set to enter into negotiations with British firm Vodafone to buy rights to the M-Pesa service in a deal estimated to be worth Sh1.3 billion ($13.4 million).
Safaricom CEO, Bob Collymore, who was set to leave the firm but got his contract extended by one year, told Reuters news agency the purchase of M-Pesa rights will yield significant savings in royalties paid to Vodafone and expand the mobile money service to new African markets.
“More important than the significant savings is about us determining the future, the roadmap of M-Pesa because at the moment the roadmap is determined by Vodafone,” Mr Collymore told Reuters.
Safaricom currently pays 2% of its annual M-Pesa revenue to Vodafone while Vodacom, a South African telco operator that owns 35% of Safaricom, pays 5% in an intellectual property fee to Vodafone from its M-Pesa business, which is mainly in Tanzania.
Vodafone has a 5% stake in Safaricom while the Kenyan government controls 35% shareholding.
Income from M-Pesa stood at Sh75 billion ($741 million) in Safaricom’s financial year ended March 2019. Safaricom net profit grew by 14.7% to Sh63.4 billion in the financial year ended March 2019 on the back of strong M-Pesa and mobile data performance, marking the seventh straight year of a growing bottom-line.