Vodacom Rules Out Spinning Off M‑Pesa Amid Regulatory Pressure in Kenya

M‑Pesa is not merely a fintech service; it is deeply entwined with Safaricom’s telecom operations, providing a competitive edge through bundled services, deeper customer engagement, and more frequent usage. Separating it would affect not only the company’s valuation and shareholder returns but also Kenya’s broader digital finance ecosystem, where M‑Pesa plays a critical role in transactions, savings, and lending.

Analysts caution that the high tax liability, along with Safaricom’s opposition, complicates any potential structural change. The CBK and Treasury are left balancing the desire for fiscal gain, regulatory oversight, and the need to maintain financial stability in the mobile-money sector.

What This Means for Stakeholders

For investors, Vodacom’s decision eliminates the immediate possibility of a separate listing for M‑Pesa, meaning returns remain tied to the broader company performance. For regulators, the move signals that oversight may need to focus on enhanced disclosure, risk management, and ring-fencing of M‑Pesa within the existing corporate structure rather than outright separation.

For the Kenyan government, the debate highlights a tension between revenue ambitions and the need to protect a system that millions of Kenyans rely on for everyday transactions. CBK Governor Kamau Thugge has stated that while a separation could boost government revenues, it must also consider operational and market impacts.

Vodacom’s ruling out of an M‑Pesa spin-off underscores the strategic importance of fintech integration in driving value for telecom companies while spotlighting ongoing tension with the state.

The conversation has shifted from whether M‑Pesa should be separated to how it should be governed within Kenya’s regulatory and fiscal framework.

With M‑Pesa now a dominant revenue driver and a critical part of Kenya’s digital economy, its future structure will continue to attract scrutiny from investors, regulators, and the public alike.

The integrated M‑Pesa now contributes 42% of total revenue, and the decision highlights tensions between fiscal ambitions, regulatory oversight, and maintaining operational synergy in Kenya’s fintech ecosystem. Analysts note that separating M‑Pesa could trigger a tax liability of KSh 75 billion and affect the broader digital finance market.