Indian telecom major Airtel has roped in another investor for its African mobile money business, continuing its monetisation drive that as already pulled in half a billion dollars since January this year.
Airtel Africa has inked an agreement with Qatar Investment Authority (QIA), the sovereign wealth fund of the Gulf nation, to sell shares worth $200 million in Airtel Mobile Commerce BV, the holding company for several of Airtel Africa’s mobile money operations.
The transaction values Airtel Mobile at $2.65 billion on a cash- and debt-free basis. This is the same valuation at which TPG’s Rise Fund and Mastercard had agreed to invest in Airtel Mobile earlier this year.
QIA is likely to own around 7.5% stake in Airtel Mobile, the same as TPG.
It will initially buy shares worth $150 million from Airtel Africa and will separately put in another $50 million once further transfers of certain mobile money operations and contracts into the company are completed.
The transaction’s first close is expected next month.
Airtel Mobile is currently a wholly owned arm of Airtel Africa, part of Indian billionaire Sunil Mittal’s Bharti Airtel group. It is the holding company for several of Airtel Africa’s mobile money operations. It intends to own the telecom company’s mobile money business across all of its 14 operating countries.
Airtel Africa offers mobile money services under the Airtel Money brand. It offers mobile wallet deposit and withdrawals, merchant and commercial payments, benefits transfers, loans and savings, virtual credit card and international money transfers.
Airtel Money is available across the group’s 14 countries of operation in Africa. 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.
Airtel Africa aims 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.
The mobile money business generated revenue of $124 million with EBITDA of $60 million for the quarter ended June 30, 2021. Revenue growth was pegged at 53.7% in constant currency, largely driven by 24.6% growth in the customer base to 23.1 million, and 25.4% rise in average revenue per user. The growth in transaction value was 64.4% (constant currency) to $14.7 billion.
QIA has had a history of backing Airtel as a group. Two years ago, it had also backed Airtel Africa itself with $200 million infusion.
Bharti Airtel had also raised over $1 billion from Qatar Foundation Endowment (QFE), the investment arm of Qatar’s royal family that operates separately from QIA. QFE exited Bharti Airtel in November 2017.