East Africa’s largest telecoms company, Safaricom said it will form a joint venture agreement with Vodacom to acquire the intellectual property rights to its M-Pesa mobile money platform.
Safaricom’s CEO, Bob Collymore, told Reuters that deal will cost about $13 million.
“We are taking ownership of M-Pesa, the brand and the intellectual property. Joint ownership between us and Vodacom and we then use that as a platform into running into other markets across the continent,” Collymore told Reuters in an interview.
“More important than the significant savings is about us determining the future, the roadmap of M-Pesa because at the moment the roadmap is determined by Vodafone,” Collymore said.
“Given that the bulk of the M-Pesa business is in Africa, between Tanzania and Kenya, it is right for us to be determinants.”
“We are watching Ethiopia closely because as we see the liberalisation of the markets, both the mobile payments market, the telecoms market and the banking sector, we think there could be opportunities,” he said.
“We are putting everything in place just subject to getting the right approvals,” he said, adding the joint venture should be set up and the deal with Vodafone completed this year.
The acquisition will basically allow Safaricom and Vodacom to determine the future of M-Pesa and also leverage the technology to develop more relevant products.
The company recently launched Fuliza, an over-draft/lending service that already has over 8 million customers. Safaricom has also hinted the market in 2017 that it plans to start operations in Nigeria, although it has given an update on the plan in recent times.
Vodacom owns 35% stakes in Nairobi-based Safaricom and according to its disclosure, the company pays about 5% of its revenue in IP fees to Vodafone. M-Pesa is Safaricom’s largest revenue driver with annual revenue for year-end March put at $741 million.
Its largest rival in Nigeria, MTN Nigeria Communications Ltd., is in the process of setting up its payment service provider business (mobile money bank) in Africa’s largest economy.