Safaricom to partner with Vodacom to purchase M-Pesa rights from Vodafone

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Vodacom and Kenya’s Safaricom will partner to acquire the intellectual property rights to the popular M-Pesa mobile financial services platform from Britain’s Vodafone.

The Chief Executive Officer of Safaricom, Bob Collymore said the 12 million euro ($13.4 million) deal will let both purchasers make significant savings in royalties paid to Vodafone and expand the service to new African markets.

Collymore told Reuters that “we are taking ownership of M-Pesa, the brand and the intellectual property. Joint ownership between us and Vodacom and we then use that as a platform into running into other markets across the continent”.

Safaricom, the most profitable company in East Africa, pays 2 percent of its annual M-Pesa revenue to Vodafone. Revenue from M-Pesa stood at 75 billion shillings ($741 million) in Safaricom’s financial year to the end of March.

Vodacom, a South African operator which owns 35 percent of Safaricom, pays 5 percent in an intellectual property fee to Vodafone from its M-Pesa business, which is mainly in Tanzania.

According to Collymore, “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. Given that the bulk of the M-Pesa business is in Africa, between Tanzania and Kenya, it is right for us to be determinants”.

Collymore revealed that the acquisition of the intellectual property rights by the new joint venture will allow the partners to more easily develop local products, pointing to Fuliza, an M-Pesa overdraft facility launched in Kenya in January.

Earlier this month, Fuliza which is operated jointly with two local banks, has garnered 8.8 million users who have borrowed a combined 45 billion shillings.

Apart from developing new products based on the M-Pesa platform, Safaricom and Vodacom also want to launch into other African markets.

Collymore noted that Safaricom’s plan to form a joint venture with Vodacom and acquire the intellectual property rights to M-Pesa still requires regulatory and shareholder approvals in South Africa. It also requires regulatory approval in Kenya.

He said “we are putting everything in place just subject to getting the right approvals”, while adding that the joint venture should be set up and the deal with Vodafone will completed this year.

 

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