Mastercard backs Airtel Africa with minority stake for $100m
Mastercard has invested US$100 million in Airtel Mobile Commerce (AMC), the mobile money subsidiary of Airtel Africa, taking a minority stake in the business as it prepares for an IPO.
Mastercard's investment, which values the whole operation at $2.65 billion, is part of a wider strategy to consolidate Airtel's mobile money operations under AMC BV, which is already the holding company for several of the firm's mobile money operations. Airtel Africa is selling up to 25% of the business and CEO Raghunath Mandava, said the intention is to go public "within four years".
In Q3 it generated revenues of $110 million, a 41.1% year on year increase, while transaction values reached $12.8 billion.
Mandava (pictured) said: “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.
A listing would no doubt help Airtel Africa achieve its debt targets, which Mandava has said he is "constantly looking to lower". Most recently, the operator sold off tower assets across multiple markets.
He continued: "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.”
Alongside the investment, the Airtel Group and Mastercard have extended commercial agreements and signed "a new commercial framework which will deepen their partnerships across numerous geographies", and across products, including card issuance, payment gateway, payment processing, merchant acceptance and remittance solutions, and others.
Mastercard isn't the first company to back 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 enable 19 million customers to receive transfers directly into their mobile wallets. In August, Airtel Africa partnered with Standard Chartered to increase access to mobile financial services and develop new products.
As Capacity reported last week, mobile money as a B2C service has come into its own during the pandemic with activity up 65% and international transactions now averaging US$1 billion a month.
Elsewhere in the sector, in September, Africell switched its AfriMoney service to a new platform, expanding the offering, and said it would put AfriMoney at the centre of a growth strategy that will take the operator into new markets. And in Somalia, Hormuud Telecom obtained a mobile money licence last month.
Leveraging the distribution channels in its telecoms business, Airtel Africa’s mobile money services currently span all 14 operating markets and include mobile wallet deposit and withdrawals, merchant and commercial payments, benefits transfers, loans and savings, virtual credit 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.