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Mastercard Invests $100m In Airtel Africa’s Mobile Money Business

Barely two weeks after signing a US$200m investment deal with The Rise Fund for its mobile money business, the board of telecommunications and mobile money services giant- Airtel Africa, on Thursday, announced the signing of yet another agreement that will see Mastercard, a leading innovator and global technology company in the payments industry, invest $100m in Airtel Mobile Commerce BV.

Airtel Mobile Commerce BV is a wholly-owned subsidiary of Airtel Africa plc and currently the holding company for several of the company’s mobile money operations, intended to own and operate the mobile money businesses across all of its fourteen operating countries.

The Transaction values Airtel Africa’s mobile money business at $2.65bn on a cash and debt-free basis and will see Mastercard holding a minority stake in AMC BV upon completion of the Transaction, leaving Airtel Africa with the majority stake.

The deal, according to a notice by Simon O’Hara, Group Company Secretary, to the Nigerian Stock Exchange, is subject to customary closing conditions including necessary regulatory filings and approvals, and the transfer of specified mobile money business assets and contracts into AMC BV.

Alongside the investment, he explained further, the Group and Mastercard have extended commercial agreements and signed a new commercial framework which will deepen their partnerships across numerous geographies and areas, including card issuance, payment gateway, payment processing, merchant acceptance and remittance solutions, amongst others.

This transaction, as well as the announcement on March 18, 2021, of a $200m investment in AMC BV by TPG’s The Rise Fund, and the sale of the Group’s telecommunication towers companies in Madagascar and Malawi on March 23, 2021, O’Hara added, is a continuation of the Group’s pursuit of strategic asset monetization and investment opportunities.

“As previously announced, Airtel Africa aims to continue to monetize its mobile money business with minority investments up to a total of 25% of the issued share capital of AMC BV, and 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,” he stressed.

Airtel Africa mobile money services, is a leading digital mobile financial services platform catering to a large addressable market in Africa (characterised by limited access to formal financial institutions with limited banking infrastructure) and includes 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 the services through a partnership with a local bank and has applied for its own mobile banking licence to be owned and operated by AMC BV.

Continuing, the statement assured: “Our mobile money business benefits from strong network effects with our core telecom business through the extensive distribution platform of kiosks and mini shops, as well as dedicated Airtel Money branches supplementing our extensive agent network, to facilitate customers’ assured wallet and cash.

“We have a clear strategy to continue to drive sustainable long-term growth in Airtel Money with a focus on assured float availability, distribution expansion and increased usage cases for our customers.

“In this year alone, in addition to Mastercard, we have added partnerships with Samsung, Asante, Standard Chartered Bank, MoneyGram, Mukuru, and WorldRemit to expand both the range and depth of the Airtel Money offerings and to further drive customer growth and penetration,” O’Hara further stressed.

The statement also quoted Raghunath Mandava, CEO of Airtel Africa, as welcoming “Mastercard as an investor in our mobile money business, joining The Rise Fund which we announced two weeks ago.”

This latest announcement, he noted, “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.

“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,” he added.

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