Qatar Holding LLC, an affiliate of the Qatar Investment Authority (QIA) is set to invest $200 million in Airtel Africa’s mobile money business dubbed Airtel Mobile Commerce BV (AMC BV).
This follows an agreement that was signed between the two firms.
According to the signed agreement, QIA will hold a minority stake in AMC BV upon completion of the Transaction (alongside other minority investors), with Airtel Africa continuing to hold the majority stake. The Transaction is subject to customary closing conditions.
A statement released by the telecom’s operator states that deal will close in two tranches, $150 million invested at the first close. The remaining $50 million will be invested at the second close.
QIA will be entitled to appoint a director to the board of AMC BV and to certain customary information and minority protection rights.
AMC BV is the holding company for several of Airtel Africa’s mobile money operations and ultimately is intended to own and operate the mobile money businesses across all of Airtel Africa’s fourteen operating countries.
Airtel Africa’s mobile money services is a leading digital mobile financial services platform catering to a large addressable market in Africa. It provides users access to mobile wallets, support for international money transfers, loans, and virtual credit cards.
Airtel Africa’s mobile money value
This transaction values Airtel Africa’s mobile money business at $2.65 billion on a cash and debt-free basis.
In April, global payments provider Mastercard invested $100 million in Airtel Mobile Commerce BV (AMC BV).
The Rise Fund, the global impact investing platform of investment firm TPG, also invested $200 million in Airtel mobile money arm.
The proceeds from the Transaction with QIA will be used to reduce Group debt and invest in network and sales infrastructure in the respective operating countries.
Airtel Africa’s most recent report for Q1 2021 shows a strong operational performance. The telecoms operator saw a year-on-year revenue growth of 53.7%, largely driven by a 24.6% growth in customer base to 23.1 million.
Transaction value went up 64.4% to $14.7 billion ($59 billion annualized); and EBITDA stood at $60 million ($240 million annualized) at a margin of 48.8%.
The company also generated $124 million in revenue ($496 million annualized), while its profits before tax year-on-year for Q1 2021 stood at $185 million.
According to Raghunath Mandava, the CEO of Airtel Africa, the deal with QIA will help the company realize the full potential from the substantial opportunity 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 realize the full potential from the substantial opportunity to bank the unbanked across Africa,” he said.
Mansoor bin Ebrahim Al-Mahmoud, the CEO of QIA said they believe in Airtel Money’s mission to expand its role in facilitating economic activity, including for customers without access to traditional financial services.
“We are delighted to build on our support of Airtel Africa in promoting financial inclusion to the large and growing population of 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,” he said.
Airtel Africa ranks amongst the top 3 mobile service providers globally with nearly 100 million subscribers. It operates in 14 countries across Africa including Nigeria, Chad, Congo Brazzaville, Democratic Republic of Congo, Gabon, Madagascar, Niger, Kenya, Malawi, Seychelles, Tanzania, Uganda, Zambia and Rwanda.
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 now be owned and operated by AMC BV.