KENYA – Safaricom 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 KSh1.42 billion (US$13.4 million).

The two said that the completion of the deal, first announced in 2019, 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 in 2019.

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

“M-PESA is hugely successful and enables millions of unbanked people in Africa to transfer money, pay bills and trade. It benefits communities and helps create a multitude of small and micro-business ventures,” Nick Read, Vodafone Group’s CEO, said.

“However, with the rapid increase in smartphone penetration, the evolution into financial services and the potential for geographical expansion, we believe the next step in M-PESA’s African growth will be more effectively overseen by Vodacom and Safaricom.”

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 KSh41.97 billion (US$393.75m) in half year period to September 2019 with users in Kenya now over 22.6 million.

Vodacom announced that its half year M-Pesa revenue grew by 37.4 percent to KSh10.6 billion (US$99.45m), contributing 18 percent to service revenue.

Users outside Kenya grew 8.5 percent to 14.3 million, processing KSh297 billion (US$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.

Interestingly only 25% of all 40m M-Pesa customers have a smartphone, but this is growing by 10% every year.