Safaricom buys US$3m stake in UK gas company Circle Gas Ltd as it diversifies revenue

KENYA – Safaricom, a mobile network operator, has bought a stake in UK firm, Circle Gas Limited at KSh384.6 million (US$3.59m), marking its entry into cooking energy business as it continues to diversify revenue streams away from voice business.

The telco discloses in the latest annual report that it completed the transaction last December, giving it 18.96 per cent of the issued shares of the England-based firm.

Circle Gas has a local subsidiary, M-Gas, with which Safaricom started working with last January. The telco did not, however, disclose the deal at that time.

The stake gives Safaricom one non-executive director slot on Circle Gas board for as long as the trademark licence and brand management co-operation agreement they signed remains in force.

“Strategically, the investment in Circle Gas solution is a digital service offering leveraging internet-of-things (IoT) and M-Pesa, that will drive our ambition to be the leading digital services provider in Kenya,” says Safaricom.

The telco also says the stake will help it drive financial inclusion through technology by offering customers an affordable, clean energy source for cooking.

Circle Gas, according to Business Daily, will also be using Safaricom’s trademarks in return for a royalty fee, giving the telco an additional income.

The agreement is already taking shape locally. Safaricom in January partnered with M-Gas to launch prepaid gas service for Kenyan households.

Customers using M-Gas access the filled gas cylinders and pay per the volume of gas used as opposed to incurring the entire cost at once. The cylinders have a smart meter that shows how much gas a customer has bought.

The M-Gas solution runs on Safaricom’s narrowband IoT network and M-Pesa. Payments start from as low as KSh1, providing customers with the flexibility of purchasing gas based on their needs and how much they can afford at a time.

In 2018 a group of investors with extensive experience in energy, infrastructure and African investments formed what became Circle Gas to find a way to bring clean cooking to low-income earners at a scale never achieved before. 

They identified KopaGas technology as the key to achieving this vision. Circle Gas is now bringing its latest technological innovation, a NBIoT-compatible smart meter to Kenya and expanding the provision of LPG to the mass market in Tanzania and Kenya.

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