Safaricom & Vodacom Plan $13m Purchase of MPESA Rights from Vodafone

Vodacom and Safaricom will jointly acquire the intellectual property rights of the M-Pesa platform from Vodafone, Reuters reported, citing Safaricom’s chief executive officer, Bob Collymore.

The deal, worth $13.4 million, would enable Vodacom and Safaricom to make ‘significant savings’ in royalties paid to the British operator , while expand the service to new markets in Africa, Collymore said.

“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,” Collymore told Reuters in an interview.

Safaricom pays 2% of its annual M-Pesa revenue to Vodafone, while Vodacom pays 5% in an intellectual property fee to Vodafone from its M-Pesa business.

Vodacom acquired a 35% stake in Kenya’s leading integrated communications company for R35 billion in 2017. Vodafone holds a 5% stake in Safaricom.

“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,” Collymore said.

In presenting results for the year ended March 2019 earlier in the month, Vodacom Group CEO, Shameel Joosub said that Vodacom was in the process of concluding the acquisition of the M-Pesa brand and platform related assets from Vodafone through a joint agreement with Safaricom.

“We expect this will further accelerate our mobile money growth plans in Africa. The commercialisation of our recently-launched payment gateway and digital wallet will assist in sustaining Financial Services growth in South Africa,” he said.

Joosub noted that the group’s investment in Safaricom contributed R2.8 billion to Vodacom Group’s operating profit, with Safaricom reporting a 7.0% increase in service revenue and a 13.1% improvement in EBIT, underpinned by strong customer growth and M-Pesa revenues.

“We added 1.7 million customers during the period up 14.8% to 13.5 million. We now process $2.8 billion in transactions a month across our operations,” he said at the time.