Kenya Weighs Splitting Biggest Listed Firm Into Three Units
An assessment has found that there would be 'a huge benefit' to the state from splitting the company into a telecommunications firm, a tower operator and its popular mobile-payments platform M-Pesa, Treasury Secretary John Mbadi said in an interview in the capital, Nairobi, on Wednesday. A final plan on breaking up the company and a reduction in the government's stake has yet to be agreed and would require cabinet approval to be implemented, he said.
Kenya's government has been considering offloading shares in Safaricom, which is part-owned by Vodacom Group Ltd. of South Africa, as part of a plan to sell state assets to private investors to boost revenue. Splitting the company into multiple units would offer an opportunity to revalue the entire business and then consider a separate listing of the units, Mbadi said.
'We are discussing whether to offload more shares as an entity or split them and then get the fresh valuation, and then get to that direction,' the minister said.
Safaricom shares rose as much as 3.4%, the most in seven weeks. The company declined to comment, while Vodacom didn't immediately respond to a request for comment.
Kenya's central bank wants the nation's telecoms companies to separate their mobile-money units from their mobile telephony services so that it can effectively supervise the fintech units. While rivals Telkom Kenya Ltd. and Airtel Kenya Ltd. have complied with the directive, Safaricom has been hampered by a tax dispute, according to Governor Kamau Thugge.
The Treasury has also almost concluded a review of that tax matter in which Safaricom is estimated to owe 75 billion shillings ($580.5 million), Mbadi said.
Splitting Safaricom 'makes little strategic sense,' according to Bloomberg Intelligence analyst John Davies. 'Operational frictions would be unavoidable, any available tower synergies can be gained from sharing deals rather than sales and other African carriers that have brought in external fintech investors have seen no sustained share-price benefit.'
Plans to split Safaricom have been under consideration for some time and the company appears to have already taken steps in line with that, according to Ali Hussein Kassim, a technology analyst and chairman of the Association of Fintechs in Kenya, a lobby group.
'There's already M-Pesa Africa, that shows you that Safaricom is on the road to have the mobile money business as a stand alone unit,' Kassim said by phone.
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--With assistance from Helen Nyambura.
(Updates with comment by minister from second paragraph; share move in fifth; analyst comment from eighth.)
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