A study of Kenya’s telecommunications industry proposes breaking up Safaricom, the country’s biggest company, according to brokerage AIB Capital.
The report compiled by Analysys Mason proposes “a raft of measures supposed to level the telecoms playing ground and tame Safaricom”, AIB chairman Linus Gitahi said in an opinion article published Wednesday in the Nairobi-based Daily Nation newspaper.
The measures include splitting the company’s mobile money business M-Pesa from the rest of Safaricom, he said.
Safaricom CEO Bob Collymore last week criticised proposals by a Kenyan lawmaker to split the company as “ plain stupid”. The company, which is is 40% owned by Newbury, England-based Vodafone, declined to comment on Wednesday.
Safaricom is Kenya’s biggest mobile provider with a 69% market share as of the end of September, according to the Communications Authority of Kenya.
Its closest competitor is the national unit of Bharti Airtel, with 17,5%.
The company’s M-Pesa mobile banking product is also a significant market leader, processing about 851bn shillings (R108bn) of transactions during the third quarter last year, about 79% of the country’s total.
If implemented, the proposals in the report risk “untold consequences” for Kenya’s financial system, Gitahi said.
“M-Pesa is a critical nerve supporting the money transfer system,” he said. “Ripping away M-Pesa from Safaricom would leave both in severe distress.”
Calls to Analysys Mason’s offices in Hong Kong and Singapore weren’t answered when Bloomberg called seeking comment.
It didn’t respond to a voicemail left at the company’s London offices outside normal business hours.
Kenya’s Communications Authority, which regulates the industry, said on Tuesday it’s reviewing the report before releasing it to the public.
Safaricom shares have fallen for the past two days to the lowest level since July, according to data compiled by Bloomberg. — (c) 2017 Bloomberg LP