April 01, 2021 | Melanie Mingas
Mastercard has invested $ 100 million in Airtel Mobile Commerce (AMC), Airtel Africa’s mobile money subsidiary, taking a minority stake in the company as it prepares for an IPO.
Mastercard’s investment, which values the entire deal at $ 2.65 billion, is part of a larger strategy to consolidate Airtel’s mobile money operations under AMC BV, which is already the holding company for several of the company’s mobile money operations. Airtel Africa is selling up to 25% of the company and CEO Raghunath Mandava said the intention is to go public “within four years”.
In the third quarter, it generated revenue of $ 110 million, an increase of 41.1% year-over-year, while transaction values reached $ 12.8 billion.
Mandava (photo) said: “This is a continuation of our strategy to increase minority stake in our mobile money business with the additional intention of listing this business on the stock exchange within four years.
A listing would undoubtedly help Airtel Africa meet its debt targets, which Mandava said it “is constantly looking to reduce”. More recently, the operator sold the assets of the tower in several markets.
He continued, “We are significantly strengthening our existing strategic relationship with Mastercard to help us realize the full potential of the substantial opportunity to improve financial inclusion in our countries of operation. The combination of our large customer base and distribution platforms and products and services, innovation and know-how, mean that together we can accelerate demand and drive the growth of financial services to the benefit of all of our customers and markets.
Along with the investment, Airtel Group and Mastercard have extended commercial agreements and signed “a new commercial framework that will deepen their partnerships in many geographies”, and through products, including card issuance, gateway payment, payment processing, merchant acceptance and payout solutions, and others.
Mastercard is not the first company to support Airtel’s mobile money service. TPG’s Rise Fund invested $ 200 million in March and, last year, a partnership with MoneyGram International was announced to allow 19 million customers to receive transfers directly into their mobile wallets. In August, Airtel Africa partnered with Standard Chartered increase access to mobile financial services and develop new products.
As Capacity reported last week, mobile money as a B2C service has established itself during the pandemic with activity up 65% and international transactions currently averaging US $ 1 billion per month.
Elsewhere in the area, in September, Africell changed its AfriMoney Service towards a new platform, expanding the offering, and said this would place AfriMoney at the center of a growth strategy that will drive the operator into new markets. And in Somalia, Hormuud Telecom obtained a mobile money license last month.
Leveraging the distribution channels of its telecommunications business, Airtel Africa’s mobile money services currently cover all 14 operating markets and include mobile wallet deposits and withdrawals, merchant and commercial payments, benefit transfers , loans and savings, virtual credit cards 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 license.