Safaricom Secures Lower Sales Commission Rate with Vodafone

Mergers, Acquisitions and Financial Results

Kenya's Safaricom is reported to have negotiated a lower sales commission fee with Vodafone, which is also its largest shareholder.

Safaricom made a 6 percent commission payment to Vodafone for all sales and services that were procured by the Group on behalf of its local subsidiaries. The rationale being that Vodafone Group could secure lower overall costs by bidding on a global basis for goods and services.

According to a report in the Business Daily newspaper, the 6 percent commission has been replaced with a flat free of Sh412 million, which will rise to Sh618 million next year. The company had made payments of Sh2.1 billion last year, so the new fee is a saving of around 80 percent for the company.

Safaricom's CEO, Bob Collymore commented: "We have converted from a variable to a fixed rate for greater certainty and to secure a more favourable deal for Safaricom,"

Vodafone, which owns 40% of the company also earns licence fees on Safaricom's M-Pesa mobile banking service.