KENYAN lawmakers have reignited efforts to separate Safaricom, the country’s largest telecom provider, from its highly profitable mobile money service, M-PESA. This renewed push follows the reintroduction of the 2022 Information and Communications (Amendment) Bill, which aims to divide Safaricom into two distinct entities, subjecting each to greater regulatory scrutiny.
The motivation behind the proposed separation is to reduce Safaricom’s market dominance and increase fair competition. Although the bill garnered little support during its previous parliamentary debate, with only two lawmakers backing it, the conversation has gained momentum once again.
Should the bill pass, Safaricom would be required to spin off M-PESA into a standalone business. This is something the company has consistently resisted, as M-PESA is a major revenue driver, boasting 31.3 million active users between March 2023 and March 2024. Over that period, the service processed an astounding KSh40.2 trillion ($312bn) in transactions.
Lawmakers and regulators argue that separating M-PESA is vital for fair competition and improved regulatory oversight. The Central Bank of Kenya (CBK) is particularly keen on the split, as it would allow them to have more direct control over M-PESA’s operations. Currently, the CBK regulates M-PESA, while the Communications Authority of Kenya (CA) oversees telecom activities.
Safaricom, however, maintains that its integrated business model adds significant value for shareholders and helps meet its financial needs. CEO Peter Ndegwa has expressed scepticism about whether separating M-PESA would enhance the company’s valuation. He has also highlighted concerns about a potential tax bill associated with the split, estimated to be as high as $582 million (KSh75bn), a figure that surpasses the company’s net profit of KSh 52.48bn ($407.24 million) in 2023.
While competitors such as MTN and Airtel Africa have successfully separated their telecom and mobile money services, Safaricom is wary of following suit. The company insists that keeping its services integrated is crucial for its continued success.
As the debate heats up, it remains to be seen whether Kenyan lawmakers will succeed in pushing through this significant structural change in the country’s telecom industry.
