Airtel Africa, a leading provider of telecommunications and mobile money services, with a presence in 14 countries across Africa, announced the signing of an agreement under which Mastercard, a leading innovator and global technology company in the payments industry, 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 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 is a leading digital
mobile financial services platform catering to a large addressable market in Africa (characterised by
limited access to formal financial institutions with limited banking infrastructure) and includes
mobile wallet deposit and withdrawals, merchant and commercial payments, benefits transfers,
loans and savings, virtual credit card and international money transfers.
Mobile money services 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 the 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 annualised), and underlying EBITDA of
$54m ($216m annualised) 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 annualised).
Our 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, we have 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 profits before tax in the full year ending 31 March 2020 and value of gross assets as of that
date, attributable to the mobile money businesses were $143.4m and $463.2m, respectively.
Key elements of the Transaction
• Agreement values Airtel Africa’s mobile money business at $2.65bn on a cash and debt free
basis.
• AMC BV, a wholly owned subsidiary of Airtel Africa, 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 once the
inclusion of the remaining mobile money operations under AMC BV is completed.
• Mastercard (through one of its wholly owned subsidiaries) will invest $100m through a
secondary purchase of shares in AMC BV from Airtel Africa. The transaction will close in two
stages. $75m will be invested at first close, once the transfer of sufficient mobile money
operations and contracts into AMC BV has been completed, with $25m to be invested at
second close upon further transfers.
• Airtel Africa aims to explore the potential listing of the mobile money business within four
years.
Under the terms of the Transaction, and in very limited circumstances (in the event
that there is no Initial Public Offering of shares in AMC BV within four years of first close, or
in the event of changes of control without Mastercard’s prior approval), Mastercard would
have the option, so as to provide liquidity to them, to sell its shares in AMC BV to Airtel Africa
or its affiliates at fair market value (determined by a mutually agreed merchant bank using
an agreed internationally accepted valuation methodology). The option is subject to a
minimum price equal to the consideration paid by Mastercard for its investment (less the
value of all distributions and any proceeds of sale of its shares, and with no time value of
money or minimum built in) and a maximum number of shares in AMC BV such that the
consideration does not exceed $200m.
The Transaction is expected to reach first close over next three to four months. From first close,
Mastercard will be entitled to certain customary information and minority protection rights.
Raghunath Mandava, CEO of Airtel Africa, commented:
“With the announcement, we are pleased to welcome Mastercard as an investor in our mobile
money business, joining The Rise Fund which we announced two weeks ago. This is a continuation
of our strategy to increase the minority shareholding in our mobile money business with the further
intention to list this business within four years. We are significantly strengthening our existing
strategic relationship with Mastercard to help us both realise the full potential from the substantial
opportunity to improve financial inclusion across our countries of operation. The combination of our
extensive customer base and distribution platforms and Mastercard’s products and services,
innovation and know how, mean we can together accelerate demand and drive growth in financial
services for the benefit of all our customers and markets.”
