Airtel has today announced the signing of an agreement under which Mastercard, will invest $100m in Airtel Mobile Commerce BV (“AMC BV”), a wholly-owned subsidiary of Airtel Africa plc (the “Transaction”). AMC BV is currently the holding company for several of Airtel Africa’s mobile money operations and is intended to own and operate the mobile money businesses across all of Airtel Africa’s fourteen operating countries.
The Transaction values Airtel Africa’s mobile money business is at $2.65bn on a cash and debt-free basis.
Mastercard will hold a minority stake in AMC BV upon completion of the Transaction, with Airtel Africa continuing to hold the majority stake. The Transaction is subject to customary closing conditions including necessary regulatory filings and approvals, and the transfer of specified mobile money business assets and contracts into AMC BV.
Alongside the investment, the Group and Mastercard have extended commercial agreements and signed a new commercial framework which will deepen their partnerships across numerous geographies and areas including card issuance, payment gateway, payment processing, merchant acceptance and remittance solutions, amongst others.
Following the announcement on 18 March 2021 of $200m investment in AMC BV by TPG’s The Rise Fund, and the sale of the Group’s telecommunication towers companies in Madagascar and Malawi on 23 March 2021, the Transaction is a continuation of the Group’s pursuit of strategic asset monetization and investment opportunities. As previously announced, Airtel Africa aims to continue to monetize its mobile money business with minority investments up to a total of 25% of the issued share capital of AMC BV, and to explore the potential listing of the mobile money business within four years.
The proceeds from the Transaction will be used to reduce Group debt and invest in network and sales infrastructure in the respective operating countries.
Airtel Africa mobile money services
Operating under the Airtel Money brand, Airtel Africa’s Mobile money services which are available across the Group’s 14 countries of operation, however in Nigeria the Group offers Airtel Money services through a partnership with a local bank and has applied for its own mobile banking licence. It is the intention that all mobile money operations will be owned and operated by AMC BV.
In their most recent reported results for Q3, the mobile money service segment (corresponding to all the businesses that are intended to be transferred to AMC BV) delivered a strong operational performance:
- Generated revenue of $110m ($440m annualized), and underlying EBITDA of
$54m ($216m annualized) at a margin of 48.7%. - Year-on-year revenue growth for the quarter was 41.1% in constant currency, largely driven by 29% growth in the customer base to 21.5m, and 9.7% ARPU growth.
- Growth in transaction value was 53.0% to $12.8bn ($51bn annualized).
Airtel’s mobile money business benefits from strong network effects with our core telecom business through the extensive distribution platform of kiosks and mini shops as well as dedicated Airtel Money branches supplementing our extensive agent network, to facilitate customers’ assured wallet and cash.
We have a clear strategy to continue to drive sustainable long-term growth in Airtel Money with a focus on assured float availability, distribution expansion and increased usage cases for our customers.
In this year alone, in addition to Mastercard, Airtel has added partnerships with Samsung, Asante, Standard Chartered Bank, MoneyGram, Mukuru and WorldRemit to expand both the range and depth of the Airtel Money offerings and to further drive customer growth and penetration.
The Transaction is expected to close over the next three to four months. From the first close, Mastercard will be entitled to certain customary information and minority protection rights.
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