Safaricom will start a joint venture with Vodacom to buy the intellectual property rights to M-Pesa mobile financial services platform from Vodafone.
The 12 million euro or $13.4 million deal will enable Safaricom and Vodacom to make savings in royalties paid to Vodafone and expand the service to new African markets, Reuters reported.
“We are taking ownership of M-Pesa, the brand and the intellectual property. Joint ownership between us and Vodacom and we then use that as a platform into running into other markets across the continent,” said Bob Collymore, Safaricom’s CEO.
Safaricom, the most profitable company in East Africa, pays 2 percent of its annual M-Pesa revenue to Vodafone. Revenue from M-Pesa stood at 75 billion shillings or $741 million in Safaricom’s financial year to the end of March.
Vodacom, a South African operator which owns 35 percent of Safaricom, pays 5 percent in an intellectual property fee to Vodafone from its M-Pesa business, which is mainly in Tanzania.
“More important than the significant savings is about us determining the future, the roadmap of M-Pesa because at the moment the roadmap is determined by Vodafone,” Collymore said.
“Given that the bulk of the M-Pesa business is in Africa, between Tanzania and Kenya, it is right for us to be determinants.”
The acquisition of the intellectual property rights by the new joint venture will allow the partners to more easily develop local products, Collymore said, pointing to Fuliza, an M-Pesa overdraft facility launched in Kenya in January.
Fuliza, which is operated jointly with two local banks, has garnered 8.8 million users who have borrowed a combined 45 billion shillings, Safaricom said earlier this month.
Apart from developing new products based on the M-Pesa platform, Safaricom and Vodacom also want to launch into other African markets.
Safaricom’s plan to form a JV with Vodacom and buy the IP rights to M-Pesa still requires regulatory and shareholder approvals in South Africa. It also requires regulatory approval in Kenya, Collymore said.