Bob Collymore, CEO of Kenya's Safaricom, has announced that the east African country's largest telecommunications company along with South Africa's Vodacom are planning to buy M-PESA intellectual property rights from the UK's Vodafone. The two companies will form a joint venture bid that will see them put together a bid of approximately $13 million for the purchase of the popular mobile money service.
Currently, Safaricom pays Vodafone in the UK royalties and license fees for every time M-PESA is used on its network. Specifically, the license fees are based on M-PESA transaction revenues on the Safaricom network.
“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,” Collymore is reported to have said in an interview.
Although M-PESA was first implemented in Kenya and went on to become popular across parts of East Africa, it has always been the intellectual property of the UK's Vodafone since 2007. As a result of Vodafone owning M-PESA, Safaricom pays 2% of its annual M-PESA revenue to Vodafone and this was approximately $741 million for Safaricom’s recently ended financial year to the end of March 2019. On the other hand, South Africa's Vodacom, (which owns Vodacom Tanzania and 35% of Safaricom) pays 5% of its M-PESA revenues in Tanzania.
Once approved and successful, the purchase of M-PESA intellectual property rights will boost both Safaricom and Vodacom's earnings considering the reported purchase price of $13 million in comparison to how much each company pays in license fees annually to Vodafone.
“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. Given that the bulk of the M-Pesa business is in Africa, between Tanzania and Kenya, it is right for us to be determinants,” added Collymore.
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