In 2007, M-Pesa was launched as a product by UK telecommunications company, Vodafone and its subsidiary, Safaricom , the largest telco operator in Kenya.
Since then, it has become one of the largest mobile-based financial services in Africa as over 40 million users and 400,000 agents use the service across seven African countries.
In 2008, South African telecoms operator, Vodacom, launched M-Pesa in Tanzania. It also launched in South Africa and Lesotho in 2010 and 2013, although the telco stopped operations in the former in 2016.
To keep operating M-Pesa in their respective markets, Vodafone consolidated its position in the two telcos. It has a 60% stake in Vodacom and a 5% stake in Safaricom.
Also, both Vodacom and Safaricom had to pay 5% and 2% of their M-Pesa annual revenue to the UK telco operator.
Last year, the African telcos began talks to acquire the whole M-Pesa brand from Vodafone. The pair planned to do this via a joint venture and in the process, would acquire the intellectual property rights of M-Pesa.
By the end of March 2020, the deal was complete. At the time, it was unclear what stake each had in the new joint venture and if there was a larger shareholder.
Safaricom’s recent financials for the fiscal year 2020 (April 1, 2019 – March 31, 2020) seems to answer these questions.
According to the financials, the registration name given to the joint venture was M-PESA Global Services Limited and was registered in Kenya. Regarding the stake, both Safaricom and Vodacom own 50% apiece in the new M-Pesa joint venture.
During the buyout of M-Pesa from Vodafone, details surrounding the cost of acquisition was unclear. Reuters , in 2019, reported that the deal was worth about $13 million (KShs 1.39b).
However, from Safaricom’s and Vodacom’s financials, we get a different picture.Safaricom stated that the acquisition costs the company KShs 1.073b ($10m). The deal cost Vodacom the same amount, thus, pegging the total acquisition cost at KShs 2.146b (~$20,071,628m).Despite the fact that Vodacom possesses a 35% stake in Safaricom, this ownership structure gives both parties equal participation in the M-Pesa brand as stated in the financials.“Decisions by the joint venture to declare and/or pay any dividends or make any capital distribution to shareholders must have the prior written consent of the existing shareholders.” M-Pesa is pivotal to the growth of both telcos In the fiscal year 2020 (FY20), M-Pesa revenue grew 12.6% from KShs 74.99b ($701.5m) to […]