Vodafone Group has hinted it could spin off its African mobile money service M-Pesa after its popularity soared through the coronavirus pandemic.

The platform offers peer-to-peer transactions in countries including Kenya, Tanzania, Mozambique, Lesotho and the Democratic Republic of Congo. It’s now pushing into new financial services like small loans, payroll and savings.

Vodafone CEO Nick Read said it’s logical to keep M-Pesa within the telecommunications group for now, to maintain benefits like distribution and cementing customer loyalty.

“In the future, there may be opportunities to scale further,” Read said on a call with reporters on Friday after 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 our investors the size and scale of that business and also offer opportunities to grow it in different ways”, he said.

VodaPay

Vodafone’s majority-owned South African subsidiary Vodacom Group recently partnered with China’s Alibaba Group to develop a “super app” called VodaPay for new services, as users and potential users upgrade to smartphones.

“M” stands for mobile and “Pesa” means money in Swahili. The platform has embedded itself in several economies, finding popularity where many people have mobile phones but don’t have conventional bank accounts. It became even more indispensable under Covid-19 lockdowns: Transactions on M-Pesa soared by 45% in the first quarter from a year earlier.

Read said the volume of transactions is equivalent to roughly half of Kenya’s GDP, citing Kenya’s Central Bank. Vodafone may launch the service in further markets, he said. — Reported by Thomas Seal, (c) 2021 Bloomberg LP