**Kenya Considers Splitting Safaricom into Three Units**
Kenya’s government is exploring the possibility of restructuring Safaricom Plc, the country’s largest publicly traded company, into three distinct units. This move may also involve reducing the government’s 35% ownership stake in the mobile operator. Treasury Secretary John Mbadi revealed in an interview in Nairobi that an assessment indicated significant benefits for the state from this separation, which would create a telecommunications firm, a tower operator, and a standalone mobile payments platform, M-Pesa.
While a definitive plan for the breakup and stake reduction is still pending and requires cabinet approval, the government is contemplating selling shares in Safaricom, which is partially owned by South Africa’s Vodacom Group Ltd. This initiative is part of a broader strategy to divest state assets to private investors to enhance revenue. Mbadi noted that splitting the company could provide an opportunity to reassess its overall value and potentially lead to separate listings for the new units.
Following the announcement, Safaricom’s shares surged by as much as 3.4%, marking the largest increase in seven weeks. The company declined to comment on the matter, and Vodacom did not respond to requests for input.
In a related development, Kenya’s central bank is urging telecom companies to separate their mobile money services from traditional telephony to facilitate better oversight of fintech operations. While competitors Telkom Kenya Ltd. and Airtel Kenya Ltd. have complied, Safaricom has faced challenges due to an ongoing tax dispute. The Treasury is nearing the conclusion of a review regarding this tax issue, with estimates suggesting that Safaricom may owe around 75 billion shillings (approximately $580.5 million).
Despite the potential benefits of splitting Safaricom, some analysts, including Bloomberg Intelligence’s John Davies, argue that such a move may not be strategically sound. They caution that operational challenges could arise, and that synergies could be achieved through partnerships rather than divestitures.
The idea of splitting Safaricom has been under consideration for some time, with indications that the company is already taking steps in this direction. Ali Hussein Kassim, a technology analyst and chairman of the Association of Fintechs in Kenya, pointed out that the establishment of M-Pesa Africa suggests that Safaricom is moving towards making its mobile money business a standalone entity.
In conclusion, while the Kenyan government is actively exploring the restructuring of Safaricom, the implications of such a move remain to be fully understood, and further discussions will be necessary to determine the best path forward.
**FAQ**
**Q: What is the potential benefit of splitting Safaricom?**
A: The separation could lead to a reassessment of the company’s value and allow for more focused management of its telecommunications, tower operations, and mobile payments services.
