Kenya’s government is reportedly considering a major restructuring of its largest listed company, Safaricom Plc, proposing to split it into three separate businesses in an effort to enhance operational efficiency and value creation. “An assessment has found that there would be ‘a huge benefit’ from splitting the company,” Kenya’s Treasury Secretary said in a sit-down interview, as reported by Bloomberg.
The proposed Safaricom split would create three distinct units — telecommunications, a tower operator, and the mobile money service M-Pesa. Treasury Cabinet Secretary said an assessment found “huge benefit” in the separation, noting that the move could unlock shareholder value, improve efficiency, and allow for more targeted regulation of each business.
Telecoms would continue to handle voice and data services, the tower operator would manage infrastructure such as masts and network assets, while M-Pesa would operate as a standalone financial services company under closer oversight from the Central Bank of Kenya.
Safaricom, a telecommunications and financial services powerhouse, has long been instrumental in Kenya’s economy. Its mobile money platform, M-Pesa, revolutionised digital payments across East Africa and remains a critical pillar of the company’s success. Proposal to restructure now emerges amid growing interest in unlocking shareholder value and improving competitiveness.
Such structuring is not without precedent. Globally, conglomerates and diversified firms have often unlocked value by segmenting operations. For instance, Honeywell recently announced plans to create three independent companies from its existing divisions to sharpen strategic focus and enhance shareholder returns.
Safaricom is the biggest player in Kenya’s telecom market, holding most of the subscribers and a strong position across different services. Its dominance has raised concerns about fair competition, prompting regulators to consider measures to keep the market balanced.
At the same time, Safaricom’s mobile money service, M-Pesa, continues to lead the industry despite losing some ground to competitors like Airtel Money. Even with this decline, M-Pesa still controls more than 90% of Kenya’s mobile money market, underscoring its overwhelming influence in the sector.
In 2022, Airtel Networks Limited completed the separation of its mobile money business from its telecommunications services. The transfer created a new entity – Airtel Money Kenya Limited (AMKL) which took over the running of Airtel’s mobile money unit.
AMKL received approval from the Central Bank of Kenya (CBK) to carry out payment services in the country and was set to provide Airtel Money services. The split was conducted under the supervision of CBK, which has been seeking to ring-fence mobile money services from other telecom business lines.
Last month, in a similar move, MTN Uganda secured shareholder approval for a major structural transformation aimed at enhancing its financial technology strategy. In a resolution passed during an extraordinary general meeting, the company confirmed plans to separate its mobile money business, MTN MoMo, into a new entity to be operated under MTN Group Fintech Holdings B.V.
Kenyan lawmakers have for several years pressed Safaricom to separate its mobile money service, M-Pesa, into a standalone business, arguing that the platform’s overwhelming dominance in digital payments poses risks to competition and financial stability.
The Communications Authority of Kenya regulates Safaricom’s telecommunication business, while the CBK currently regulates the mobile money business. The central bank is pushing for total separation to enhance oversight.
Legislators and regulators say that carving out M-Pesa would allow for stronger oversight of the financial sector, particularly as mobile money transactions now account for more than half of Kenya’s GDP annually.
Once M-Pesa comes under the direct regulation of the Central Bank of Kenya (CBK), it will no longer need to rely on partnerships with other banks to provide financial services. At the moment, M-Pesa works with NCBA Bank and KCB Bank to run products like Fuliza and KCB M-Pesa mobile loans. These partnerships have been an important source of digital income for the two banks.
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