Safaricom, Vodacom pay Sh1.4bn for M-Pesa brand

Safaricom #ticker:SCOM and its South African parent company Vodacom have completed the buying of intellectual property rights to M-Pesa service from British firm Vodafone in a deal estimated at Sh1.42 billion ($13.4 million).

The two announced on Tuesday that the completion of the deal, first announced last year, will give them full control of the M-Pesa brand, product development and support services.

The purchasing of the rights will further yield significant savings in royalties paid to Vodafone and expand the mobile money service to new African markets.

Safaricom has been paying two percent of its annual M-Pesa revenue to Vodafone while Vodacom has been paying five percent in an intellectual property fee.

Former Safaricom CEO Michael Joseph said the deal will improve operational capabilities of M-Pesa, which is now on its thirteenth year in Kenya.

“This new partnership with Vodacom will allow us to consolidate our platform development, synchronise more closely our product roadmaps, and improve our operational capabilities into a single, fully converged centre of excellence,” said Mr Joseph.

The acquisition of the IP rights by the new joint venture will allow the partners to develop local products such as Fuliza, an M-Pesa overdraft facility launched in Kenya in January last year.

Apart from developing new products based on the M-Pesa platform, Safaricom and Vodacom also want to launch into other African markets.

M-Pesa has become a key revenue earner for both Safaricom and Vodacom and the outlook remains promising on the back of growing network and mobile phone penetration.

Safaricom’s M-Pesa revenue grew by 18.2 percent to Sh41.97 billion in half year period to September last year with users in Kenya now over 22.6 million.

Vodacom announced that its half year M-Pesa revenue grew by 37.4 percent to Sh10.6 billion, contributing 18 percent to service revenue.

Users outside Kenya grew 8.5 percent to 14.3 million, processing Sh297 billion ($2.8 billion) in transactions a month in the six months to September 2019.

M-Pesa is operational in Kenya, Tanzania, Lesotho, DRC, Ghana, Mozambique and Egypt.

“This is a significant milestone for Vodacom as it will accelerate our financial services aspirations in Africa. Our joint venture will allow Vodacom and Safaricom to drive the next generation of the M-Pesa platform — an intelligent, cloud-based platform for the smartphone age,” said Vodacom Group CEO Shameel Joosub.