Kenyan Govt Mulls Dividing Safaricom into 3 Units Amid Plans to Sell Its Stake
- National Treasury Cabinet Secretary (CS) John Mbadi explained how the government would benefit by selling its Safaricom stake
- The plan is to split the company into a tower operator, a telecoms company, and its well-known mobile payments platform, M-Pesa
- Safaricom listed the shareholders of the company in a statement sent to TUKO.co.ke, noting that the government is a majority shareholder
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The government of Kenya is considering splitting Safaricom, the largest publicly traded company in the country, into three separate entities.
Source: Twitter
The plan is part of the state's move to reduce its stake in the telecommunications company.
Safaricom told TUKO.co.ke that the state owns 35% of the telco, while Vodacom Group controls 35% of shares.
"The government of Kenya holds a 35% stake in Safaricom, Vodacom Group owns 35%, Vodafone Group has about 5%, and the remaining 25% is held by individual and institutional investors through the Nairobi Securities Exchange (NSE)," the company revealed.
What did John Mbadi say?
National Treasury Cabinet Secretary (CS) John Mbadi told Bloomberg on Wednesday, August 20, that the government will benefit significantly from dividing the company into three units.
According to an assessment, the plan is to split the company into a tower operator, a telecoms company, and its well-known mobile payments platform, M-Pesa.
" A final plan on breaking up the company and a reduction in the government’s stake has yet to be agreed upon and would require Cabinet approval to be implemented," Mbadi stated.
Source: Getty Images
Why is Kenya selling its Safaricom stake?
As part of its strategy to sell state assets to private investors to increase revenue, the Kenyan government has been mulling selling shares in Safaricom, partially owned by Vodacom Group Ltd of South Africa.
According to Mbadi, dividing the company into three units would provide a chance to reassess the company as a whole before considering the sale of each entity separately.
"We are debating whether to sell off additional shares as a group or to break them up and obtain a new valuation before moving forward," he said.
Is Safaricom in a tax dispute with KRA?
The Central Bank of Kenya (CBK) wants the country's telecom providers to keep their mobile money and mobile phone services distinct to better oversee the fintech businesses.
CBK governor Kamau Thugge noted that Safaricom has been hindered by a tax issue, while competitors Telkom Kenya Ltd and Airtel Kenya Ltd have complied.
"The tax burden, which amounts to approximately KSh 75 billion, is one of the reasons that has been causing delays in the separation of M-Pesa mobile money from Safaricom," Thugge told Business Daily.
According to Mbadi, the Treasury is also nearly done reviewing the tax case.
When was M-Pesa founded?
M-Pesa is Safaricom's flagship product, launched in 2007.
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According to a video that Safaricom shared online, Nick Hughes was the driving force behind M-Pesa.
Hughes oversaw Vodafone's social enterprises division at the time, which held 40% of Safaricom.
Safaricom founding CEO Michael Joseph described himself as the 'mother of M-Pesa'.
Proofreading by Asher Omondi, copy editor at TUKO.co.ke.
Source: TUKO.co.ke
