Vodafone Kenya Unit Faces Proposals for Breakup in ReportBy and
Report by Analysys Mason proposes hiving off M-Pesa business
Implementation of proposals risks ‘untold consequences’: AIB
A study of Kenya’s telecommunications industry proposes breaking up Safaricom Ltd., the country’s biggest company, according to brokerage AIB Capital Ltd.
The report compiled by Analysys Mason proposes “a raft of measures supposed to level the telecommunications playing ground and tame Safaricom,” AIB Chairman Linus Gitahi said in an opinion article published Wednesday in the Nairobi-based Daily Nation newspaper. The measures include splitting the company’s mobile-money business M-Pesa from the rest of Safaricom, he said.
Safaricom Chief Executive Officer Bob Collymore last week criticized proposals by a Kenyan lawmaker to split the company as “plain stupid.” The company, which is is 40 percent owned by Newbury, England-based Vodafone Plc, declined to comment on Wednesday.
Safaricom is Kenya’s biggest mobile provider with a 69 percent market share as of the end of September, according to the Communications Authority of Kenya. Its closest competitor is the national unit of Bharti Airtel Ltd., with 17.5 percent. The company’s M-Pesa mobile-banking product is also a significant market leader, processing about 851 billion shillings ($8.2 billion) of transactions during the third quarter last year, about 79 percent of the country’s total.
If implemented, the proposals in the report risk “untold consequences” for Kenya’s financial system, Gitahi said.
“M-Pesa is a critical nerve supporting the money transfer system,” he said. “Ripping away M-Pesa from Safaricom would leave both in severe distress.”
Analysys Mason declined to comment on the report, which is currently a draft that has “yet to be finalized,” it said in an e-mailed response to questions. Kenya’s Communications Authority, which regulates the industry, said on Tuesday it’s reviewing the report before releasing it to the public.
Safaricom shares have fallen for the past three days to the lowest level since July, according to data compiled by Bloomberg.