Following the closure of Aditya Birla Idea Payments Bank Ltd (ABIPBL), Vodafone Idea Ltd is now closing M-Pesa, the mobile phone-based money transfer, financing and microfinancing service launched by Vodafone in 2007.
Earlier last week, Aditya Birla Idea Payments Bank announced its closure due to “unanticipated developments” that made its economic model “unviable”.
“The merger of Vodafone m-Pesa with ABIPBL has thus been called off and business prepaid instruments and business correspondence are in the process of closure,” Vodafone Idea Chief Executive Officer Balesh Sharma said company’s earning call.
Due to regulatory changes for the payment bank business and deterioration in the health pf telecommunications sector, Vodafone has decided to wind up its M-Pesa vertical.
“Now, that we are proposing not to have the payments bank as well as the ‘m-Pesa’ business. Instead of having m-Pesa of our own, we will explore the market and partner with fintech companies,” Sharma said.
Vodafone Idea wrote of around ₹210 crores in the June quarter on account of the closure of its payment bank.
“The impairment charges include impairment in payments bank and m-Pesa entities of Rs 2.1 billion (Rs 210 crore) following the decision to discontinue payments bank, wallet, and business correspondent businesses in the respective entities,” Vodafone Idea Chief Financial Officer Akshaya Moondra said.
During the first quarter of 2019-2020, Vodafone has written off more than ₹580 crores. M-Pesa was one of the 11 firms that grabbed payments bank license from the Reserve Bank of India in 2015.
A lot of companies including Tech Mahindra, Cholamandalam Investment and Finance Company, IDFC Bank Limited and Telenor Financial Services has already dropped their business idea of starting payments bank and surrendered their licenses even before commencing their business.
Vodafone is set to focus on its core business rather than entering into the finance vertical and improve its 4G spectrum in the future. The company is looking forward to regaining its market leadership position by analyzing the reasons for customer churn out to other networks like Jio and Airtel.