Safaricom considers conversion of M-Pesa business into subsidiary

Kenya’s biggest telecoms operator Safaricom is considering turning its M-Pesa mobile financial services business into a subsidiary, its chairman said on Thursday.

M-Pesa, which was launched as the world’s first ever mobile phone-based money transfer service 15 years ago, has evolved to account for roughly half of Safaricom’s annual revenue.

No timetable has been set yet for turning the business into a subsidiary, said Michael Joseph, the company’s chairman.

“It is early stages of thinking only,” he said.

Patrick Njoroge, the governor of the central bank, had earlier in the day told lawmakers that turning M-Pesa into a subsidiary will ring-fence it from the operations of the wider business, the Standard newspaper reported.

The move is part of a wider push to separate financial firms offered by telecom operators from their core businesses, the paper quoted Njoroge as saying.

Operating financial services businesses as subsidiaries will enhance the central bank’s supervision, the governor told the lawmakers, and offer greater protection to customers.

M-Pesa allows its 30 million users, even those with basic-feature phones, to send money to each other, make payments, save, borrow small amounts and even purchase micro-insurance.

Its rapid growth has powered Safaricom, which is the biggest firm by value on the Nairobi bourse, to also become the most profitable company in East Africa.

Safaricom is partly owned by South Africa’s Vodacom and Britain’s Vodafone. MarketScreener