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Kenyan lawmakers are once again advocating for the separation of Safaricom’s telecom operations from its highly successful mobile money service, M-PESA. If passed, the proposed bill would mandate the separation of the two businesses, a move that Safaricom has continually opposed.
M-PESA, a dominant player in Kenya’s financial sector, had 31.3 million active users between March 2023 and March 2024. During this period, it processed a remarkable $312 billion (KES 40.2 trillion) in transactions. Due to M-PESA’s massive market power, legislators and regulators argue that splitting the business from Safaricom is essential to ensure fair competition and enhance regulatory oversight.
The bill stipulates, “A person may engage in any other business provided that such person shall legally split or separate the telecommunications business from such other businesses.” This legal requirement would force Safaricom to unbundle M-PESA from its telecom operations.
Despite mounting pressure, Safaricom has defended its integrated structure, asserting that the current model benefits shareholders by creating synergies between telecom services and mobile money. In contrast, competitors like MTN and Airtel Africa have already implemented similar separations.
Airtel, for instance, spun off its Airtel Money division from its core telecom business in 2021, resulting in rapid growth in its mobile money unit. Similarly, MTN Group separated its mobile money operations, which contributed to securing a $5.2 billion investment deal with Mastercard.
Safaricom’s CEO, Peter Ndegwa, remains skeptical about the potential advantages of a split, arguing that it would not improve the company’s overall valuation or meet its financial objectives. Moreover, the company has raised concerns about a possible tax burden arising from the restructuring. Safaricom estimates that it could face a tax bill of KSh 75 billion ($582 million), which would surpass its 2023 net profit of KSh 52.48 billion ($407.24 million).
Despite these concerns, the Central Bank of Kenya (CBK) continues to advocate for the separation. The CBK argues that unbundling M-PESA would enhance the regulatory framework for monitoring and overseeing mobile money transactions, ultimately benefiting Kenya’s financial ecosystem.
The debate over whether Safaricom should split its operations persists, with significant implications for Kenya’s telecom and financial sectors.
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