Vodafone has reported surging growth at its African mobile money platform M-Pesa as the telecoms group and its rivals look at ways of unlocking the value of fast-growing financial fintechs on the continent.
The UK company said that the number of transactions conducted over the mobile payments system shot up 44 per cent in the three months to June to 4.5bn, with €63bn of funds transferred over it over during that time.
M-Pesa, which is named after the Swahili word for money, was launched in Kenya more than a decade ago as a basic money transfer system that worked over basic feature phones. It quickly expanded to other countries and has become a fundamental part of the African economic system, with customers using it to pay wages, buy insurance and pay utility bills in the smartphone era.
Fifty per cent of Kenya’s gross domestic product is now carried over M-Pesa according to the country’s central bank, Vodafone chief executive Nick Read said on Friday.
The service, which has more than 40m users across seven African countries, accounts for between 30 per cent and 50 per cent of GDP in some other markets and will soon launch in countries like Ethiopia where Vodafone does not have a telecoms network.
The rising value of fintech companies in Europe and Africa has alerted Vodafone to the hidden value of M-Pesa on its balance sheet. Having split out its towers business this year, with Vantage Towers now listed in Germany at a €15bn market valuation, it is now separating out its financial services business into legally separate entities to “highlight the size and scale of that business†according to Read.
Other companies have already started to act. Airtel Africa sold a stake in its smaller mobile money service to Mastercard this year for $100m which valued the fintech platform at $2.6bn, while South Africa’s MTN has said it is open to spinning off its mobile money service to boost its value.
However Vodafone intends to keep investing in M-Pesa, saying that the service is still in the “early stages†of its development and that the growth of the business is not being constrained by being part of the wider telecoms group.
But over time it will consider bringing in new partners, selling a stake or acquiring other businesses, according to Read. It has already partnered with China’s Alibaba to offer a “super app†offering a range of ecommerce services in South Africa.
His comments came as Vodafone reported better than expected first-quarter results. The group reported service revenue growth of 3.3 per cent thanks to a 56 per cent increase in roaming revenue, as travel restrictions eased during the quarter.
Overall revenue increased by 5 per cent to €11.1bn. Shares rose 2.5 per cent to 119p in early trading.
