Kenya is restructuring Africa’s largest phone company, Safaricom, and is now adding infrastructure issues to the current talks about splitting the company.
The main goal of the planned separation, which is mostly about separating Safaricom’s mobile money service, M-PESA, is to create separate businesses for better oversight and competition.
However, the government is now actively bringing up infrastructure issues, so it’s not just about the split anymore.
Pressure builds for Saricom’s shift and infrastructure focus
Governments have long sought to split Safaricom’s M-PESA, which has 31 million active users and transacted $312 billion in transactions between March 2023 and March 2024.
The Central Bank of Kenya, which regulates M-PESA, hopes to limit Safaricom’s market dominance and increase transparency. “In addition to operating a telecommunications system… a person shall legally split or separate the telecommunications business from such other businesses,” states the revived amendment bill being debated.
The Kenyan government reportedly includes infrastructure management, network towers, and data services in these talks.
A holding firm will manage mobile money, infrastructure leasing, and telecoms services.
CEO Peter Ndegwa suggested monetising tower assets, suggesting a broader business strategy than separation.
Challenges: tax burdens and strategic concerns
However, separation is difficult. Safaricom claims dividing M-PESA would cost $582 million in taxes, surpassing its 2023 net profit.
According to Central Bank of Kenya Governor Kamau Thugge, the intricacy of this tax load has slowed development.
Safaricom opposes the move because merging mobile money with telecom services, which Airtel and MTN have separated, is strategic.
“Ndegwa said, ‘Have they gotten better valuations? Probably not. Have they raised more money? Yes, probably.
Do we need more money? No, we don’t,” reflecting the company’s stance on the split. The government pushes for separation to enhance telecom regulation and equalise the playing field in Kenya.
These initiatives integrate infrastructure, financial, and regulatory concerns into Safaricom’s future, which could change Kenya’s telecom industry.