South Africa’s telecoms operator Vodacom Group is considering selling part of its stake in mobile money platform M-Pesa to unlock value running into billions of shillings from the fast-growing service.
Chief executive Shameel Joosub disclosed the sale plans at an investor briefing on May 18 in response to an analyst who asked if the company is likely to spin off M-Pesa and whether the multinational is willing to sell a stake to external parties.
M-Pesa is currently offered by Vodacom majority-owned subsidiaries in Tanzania, Mozambique, Lesotho and Democratic Republic of the Congo (DRC). Vodacom also owns an indirect stake in M-Pesa’s business in Kenya through its 35 percent stake in Safaricom. Joosub said the company will consider selling part of its stake in M-Pesa if investors continued to ignore the value of the platform.
“To be honest, we would like the market to give us more credit for our financial services assets and we are not in a position yet where we think the time is optimal to sell or even monetise a portion of the assets because we believe there is still a lot of growth left in M-Pesa,” Joosub said.
“But (it is) certainly something that is in consideration. We have structurally set up in the different markets M-Pesa and financial services into separate entities. So it does give us optionality going forward,” he added in reference to the sale of M-Pesa.
Vodacom Group did not give timelines on the potential sale of the mobile money service, signalling it will hold on to M-Pesa in the short term. Mr Joosub said that should a decision be made to sell part of M-Pesa, the structure of such a sale will have to be defined. The options include selling a stake in the platform in specific countries or in M-Pesa Global Services – the new joint venture it runs with Safaricom on a 50/50 basis and which aims to take the service international.
The plans to unlock value from M-Pesa comes after rival Airtel Africa signed deals to sell minority stake in its continental financial service for huge sums through its subsidiary Airtel Mobile Commerce BV. “In line with our strategy of unlocking value in our mobile money business, we will soon welcome two new minority investors (The Rise Fund and Mastercard) in agreed transactions which value this part of our business at $2.65 billion, as well as bringing $300 million into the group,” the multinational said when releasing its annual results last week.
Vodafone Plc, the parent company of Vodacom, signalled that M-Pesa could fetch greater sums should a partial sale of the mobile money platform be implemented.
“We have a base of mobile money of over 60 million in active customers. So we are about three times the size of Airtel,” Vodafone’s chief executive Nick Read said on Tuesday in response to an analyst who asked if the multinational will make similar deals like Airtel. Vodacom’s financial services, including Kenya, had 57.7 million customers and its total revenue stood at R19.3 billion ($1.38 billion) in the review period.
