Vodafone Group Plc has hinted at the possibility of spinning off Mobile Money Service, Mpesa following its huge success especially during the pandemic.
Mpesa allows customers to send and receive money on their mobile phones. In the last few years, the financial services have grown to include loans, savings and pay roll.
The service is available in Kenya, Tanzania, Mozambique, Lesotho and the Democratic Republic of Congo.
Vodafone Chief Executive Officer Nick Read discussed the company’s plans, saying although there was a possibility of branching out in the future, keeping Mpesa within the telco was more logical for now to maintain benefits like distribution and cementing customer loyalty.
“In the future, there may be opportunities to scale further,” Read told reporters on Friday after reading Vodafone’s first-quarter results.
“At that point I think we would make the decision as to whether we would want to do anything, let’s say, more inorganically.” For now, Vodafone has decided to carve out its financial services activities into a new legal entity “to highlight to
For now, Read says Mpesa activities are confined in a new separate legal entity “to highlight to our investors the size and scale of that business and also offer opportunities to grow it in different ways.”
Mpesa soared in popularity during the Covid-19 pandemic. Due to lock downs, social distancing and no contact recommendations, mobile money became a way of life for many users. Transactions reported grew by 45 percent in the first quarter of 2020, compared to a similar period in the previous year.
Citing the Central Bank of Kenya (CBK), Read said the volume of Mpesa transactions is equivalent to about half of Kenya’s gross domestic product (GDP).
Read said there was a possibility of Vodafone launching the service in other markets.