Feb 9, 2023

Mawazo Writing Africa

Writing about the main

Airtel sells mobile cash unit stake for $550m

London-listed Airtel Africa Plc has divested a 25.77% stake in its local mobile money business as part of a continent-wide deal raising $550 million from four institutional investors.

The multinational’s stake in Airtel Money Kenya Limited fell from 100 percent last year to 74.23 percent in the fiscal year ended March.

There was also a similar reduction in its stake in Airtel Mobile Commerce (Kenya) Limited announced during the period.

Similar ownership changes in the mobile money business were also seen in markets such as Rwanda, Tanzania and Zambia.

Airtel Africa announced the sale of its subsidiaries announced in its latest annual report as the prospect of a cashless Africa sparks a battle for control of its payment platforms.

The record-breaking deal gives Airtel Money a 25 rating 0 billion Ksh ($2.1 billion), suggesting that the competing M-Pesa platform, available in Kenya and five other African markets like Tanzania and Moz ambique, could be valued even higher.

Airtel previously announced that it was selling a minority stake in its mobile money business in Africa to raise cash, using some of the funds to reduce the group’s debt.

“We have one Minority stake of $550 million from four investors in Airtel Mobile Commerce B.V. received,” reads the multinational’s report.

“The Rise Fund invested $200 million, Mastercard $100 million, Qatar Holding LLC (QIA) $200 million and 50 million US dollars from Chimera Investment LLC.”

Under the agreements, the Mobile Money businesses would be integrated into the holding company Airtel Mobile Commerce B.V., which operates in the Netherlands.

The The multinational’s interest in Airtel Money Kenya Limited could fall further after the government passed a directive requiring the telecom company to sell at least 30% stake in the company to local investors.

< p>“Airtel Money Kenya Limited, which holds a Content Service Provider license from the Communicatio ns Authority of Kenya, has three years from the date of the license, effective November 2020, to comply with the requirement to hold a 30 percent local ownership said the multinational.

“According to the amended ICT Directive, a licensee may apply to the Ministry of ICT for an extension to meet the requirement or be granted an exemption.”

A similar rule also applies to Airtel Networks Kenya Limited, which provides cellular services and is currently fully owned by the multinational. Airtel Money’s minority stakes sold in African markets signal the tremendous value of mobile financial services platforms.

M-Pesa’s reach has recently expanded to more than 200 countries following an agreement with global payments company Visa. M-Pesa is offered by Kenya’s Safaricom and by subsidiaries of South Africa’s Vodacom Group.

Airtel Money generated revenue of US$553 million in the African markets in March-ending year, while 26.2 million users the platform.

Read more here