African telecoms operator, Airtel Africa has secured another investment for its mobile money arm — Airtel Mobile Commerce BV (AMC BV).
The company revealed that it is set to receive $200 million into AMC BV through a secondary purchase of shares from Airtel Africa.
The deal will be closed in two tranches, $150 million invested at the first in August, subject to customary closing conditions including necessary regulatory filing.
The remaining $50 million will be invested at the second tranch once further transfers of certain mobile money operations and contracts into the AMC BV perimeter have been completed.
The investment is from Qatar Holding LLC, an affiliate of the Qatar Investment Authority (QIA), the sovereign wealth fund of the State of Qatar which has over $300 billion in assets.
With the investment, QIA will hold a minority stake while Airtel Africa continues to hold the majority stake.
The transaction still values Airtel Africa at $2.65 billion on a cash and debt-free basis like other deals. However, QIA is entitled to appoint a director to AMC BV’s board and has certain customary information and minority protection rights.
Over $500 million raised
This latest investment comes just months after Mastercard invested $100 million in Airtel mobile money business and two weeks after TPG’s Rise Fund paid $200 million for a share of the company.
In February, Airtel Africa first made it known that it wanted to sell a minority stake in AMC BV to raise cash and sell off some assets. Since then, the company raised a total of $500 million for its mobile money business in 2021 alone.
According to the company, the new influx of funds will be used to reduce debt and invest in network and sales infrastructure in the respective operating countries.
Speaking on the investment, Raghunath Mandava, CEO of Airtel Africa, expressed delight in QIA helping its drive to bank the unbanked across Africa.
“With today’s announcement we are pleased to welcome QIA as a prospective investor in our mobile money business, joining both Mastercard and TPG’s The Rise Fund as a further partner to help us realise the full potential from the substantial opportunity to bank the unbanked across Africa.”
Raghunath Mandava, CEO of Airtel Africa
Africa’s largest mobile money operator
Founded in 2010, AMC BV is an Airtel Africa subsidiary and the holding company for several of Airtel Africa’s mobile money operations across 14 African countries, including Kenya, Uganda and Nigeria.
The mobile money arm operates one of the largest financial services on the continent. It provides users access to mobile wallet deposit and withdrawals, merchant and commercial payments, benefits transfers, loans and savings, virtual card and international money transfers.
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 its most recent report for Q1 2022, the mobile money services delivered a strong operational performance generating a revenue of $124m and an underlying EBITDA of $60m at a margin of 48.8 per cent.
The revenue growth for the quarter was 53.7% Y-o-Y in constant currency, largely driven by 24.6 per cent growth in the customer base to 23.1 million, and 25.4 per cent ARPU growth.
For transaction value, the growth rate was pegged at a whopping 64.4% in constant currency, bringing the total to $14.7 billion.
In Summary…
Airtel’s mobile money business has benefited strongly from its strong network presence.
Its core telecom business through the extensive distribution platform of kiosks and mini-shops, as well as dedicated Airtel Money branches, supplement its extensive agent network to facilitate customers’ access to assured wallet and cash.
Mansoor bin Ebrahim Al-Mahmoud, CEO of QIA, believes that the sovereign’s wealth fund investment in Airtel Africa would help promote financial inclusion in Sub-Saharan Africa.
“Airtel Money plays a critical role in facilitating economic activity, including for customers without access to traditional financial services. We firmly believe in its mission to expand these efforts over the coming years,”
Mansoor bin Ebrahim Al-Mahmoud, CEO of QIA
With the new influx of funds, the company is poised to further the expansion of its mobile money business across the continent.
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