KENYA: Govt Considers Splitting Safaricom into Three Distinct Units

In a significant policy development, Kenya’s Treasury is reportedly evaluating a structural overhaul of Safaricom PLC, the nation’s most prominent publicly listed company. Under consideration is a proposal to divide the telecommunications giant into three standalone entities, its core telecom services, a tower infrastructure business and the M-Pesa mobile money arm, as the government prepares to offload part of its stake in the company.

Rationale Behind the Proposed Breakup

Treasury Secretary John Mbadi has indicated that the planned division could yield considerable benefits for both the economy and public finances. By separating Safaricom, regulators hope to streamline operations, enhance financial transparency, and enable more focused governance across each sector.

Central Bank of Kenya (CBK) has long advocated for ring-fencing mobile money services from telecom operations—an approach already embraced by competitors Airtel and Telkom Kenya. This separation could facilitate improved regulatory oversight, particularly of the fintech space.

Furthermore, M-Pesa currently commands over 90% of Kenya’s mobile money market, underpinning its dominance in the country’s financial ecosystem. Separating it could alleviate concerns regarding concentration of financial power.

A Strategic Move Toward Privatization

The contemplated restructuring comes amid broader privatization efforts. Kenya’s government, which owns a 35% stake in Safaricom, is aiming to raise approximately KSh 149 billion (nearly USD 1.16 billion) in the 2025/26 fiscal year by selling stakes in state-controlled firms—including Safaricom.

Dividing Safaricom into discrete, industry-specific businesses could open the door to separate stock market listings or targeted private investments, potentially unlocking additional value.

Market and Analyst Reactions

Safaricom’s share price reacted positively to the announcement, surging up to 3.4%—its strongest gain since January of this year.

However, not all experts are convinced. Bloomberg Intelligence analyst John Davies cautioned that the split may be problematic, arguing that synergies—such as those from shared tower infrastructure—could be lost and may not translate into enhanced shareholder value post-division.

Ali Hussein Kassim, Chair of the Association of Fintechs in Kenya, pointed out that Safaricom may already be preparing for segmentation. He observes that "There’s already M-Pesa Africa, indicating that Safaricom is moving towards having the mobile money business operate independently."

Outlook: What Comes Next?

At this stage, the plan requires cabinet approval before any formal process can begin. Safaricom and Vodacom, its significant external shareholder, have so far refrained from comment.

If approved, the restructuring could mark one of the most consequential changes in Kenya’s telecommunications and fintech landscape—redefining power dynamics, regulatory frameworks, and future investment patterns in the region.

SOURCE: AGENCIES