Airtel Africa sells Sh20b stake in mobile money unit

Airtel Africa has sold a minority stake in its mobile money business to investment firm The Rise Fund as the telco seeks fresh liquidity in the wake of a difficult operating environment.

In a statement on Thursday, Airtel Africa said the Rise Fund will hold a minority stake in Airtel Africa’s mobile money business, Airtel Mobile Commerce BV (AMC BV), now valued at Sh265billion on a cash and debt-free basis.

“The transaction is the latest step in the Group’s pursuit of strategic asset monetisation and investment opportunities and Airtel Africa aims to explore the potential listing of the mobile money business within four years,” said the firm in a statement.  

“The proceeds from the transaction will be used to reduce Group debt and invest in network and sales infrastructure in the respective operating countries,” read the statement.

Airtel Money is present in 14 countries across the telco’s global network with financial records indicating the business unit brought in Sh11billion and Sh5billion in revenues and after-tax profit respectively during the third quarter of the 2020/2021 financial year.

The COVID-19 pandemic further lifted the fortunes of AMC BV due to a spike in demand for cashless payments, with revenues growing 41 per cent compared to 2019 and subscribers increasing 29 per cent to hit 21.5million.

The transaction will happen in two stages with the first tranche of Sh15billion and the remaining Sh5billion once the transfer of mobile money operations and contracts to AMC BV is completed.  

Airtel Africa hopes the new cash injection will assist retire some of its debt that has caused jitters at the group level.
According to the firm’s latest financial reports, Airtel Africa made Sh59billion in profit after tax for the year ended 31st March 2020 against a net current liability position of Sh81billion.

At the same time, the firm holds Sh180billion in bonds, including a Sh82billion bond due for repayment in May 2021.  
The transaction is subject to necessary regulatory filings and approvals.