Safaricom Plots New-Look Corporate Structure

Safaricom is preparing to restructure the company in a move that would see its mobile money unit, M-Pesa, split from its telco operations.

The move comes against the backdrop of regulatory pressure, particularly from the Central Bank of Kenya (CBK), for the separation to allow for greater oversight of financial services offered by Safaricom. Safaricom, which has previously opposed plans to split it up, has warmed up to the proposals amid increasing scrutiny on its market dominance.

The company, East Africa’s most profitable, is looking to set up a holding company. Subsidiaries under it would operate the company’s various businesses – including mobile money, connectivity and its Ethiopia venture.

CEO Peter Ndegwa further hinted at the establishment of a subsidiary that would allow Safaricom to lease its extensive network infrastructure.

“In the future, we expect there will be a holding company, probably the listed business and there will be quite a few businesses that operate under Safaricom and we are also able to monetise some of the assets we have for example the towers that we could lease in the future so probably have tower company,” Ndegwa told Smart Business.

READ>>Peter Ndegwa Admits Safaricom is Experiencing Slowed Growth

Ndegwa noted that the changes would have little effect on the company’s everyday operations.

“Even today, M-Pesa is run separately from our connectivity business so it is just making sure the businesses are legally separate,” he stated.

The split is in line with trends in the industry. Safaricom’s rivals Airtel and Telkom have both taken steps to run their mobile money businesses separate from their telco operations. Last week, Airtel announced that it had formed Airtel Money Kenya.

In May 2021, Telkom announced that it was re-organising its company structure to create two wholly-owned subsidiaries for its financial services businesses – Telkom Digital and T-Kash. According to the company, however, it has faced delays in getting regulatory approvals for the entities from the Communications Authority of Kenya (CA).

READ NEXT>>Airtel Splashes Ksh4.7B to Improve Network