Global payments leader and technology company; Mastercard and Airtel Africa have signed an agreement. In this agreement the American multinational financial services corporation; Mastercard will be investing 100 million United States Dollars in Airtel Mobile Commerce BV (AMC BV), Airtel Africa’s Mobile. Once the transaction is completed, Mastercard will subsequently own a minority stake of 3.775 percent in Airtel Mobile Commerce BV.
Mastercard will be investing 100 million United States Dollars via a secondary purchase of shares from Airtel Africa. The investment will be closed in 2 stages. The 1st tranche will be 75 million United States Dollars “once the transfer of sufficient mobile money operations and contracts into AMC BV has been completed.” This will then be followed by a 25 million United States Dollars close. The 1st transaction will be closed over the next 3 months to 4 months.
The investment will however not change Airtel Mobile Commerce BV which is valued at 2.65 billion United States Dollars on a debt free and cash basis.
The deal is coming on the backdrop of a potential listing for Airtel Africa’s Mobile Money business in the next 4 years.
If the Initial Public Offering (IPO) fails, the American multinational financial services corporation; Mastercard has been provided the option of selling its shares to Airtel Africa or any of its affiliates at a fair market value. The sale of its shares will be at a minimum price of the consideration which was paid by Mastercard for the stake, and a maximum number of shares which should be valued at less than 200 million United States Dollars.
Both companies have also extended their commercial agreements as well as signed a new commercial framework, while deepening their collaboration with regards to card issuance, payment gateway, payment processing, remittances, in addition to other areas.
According to the Chief Executive Officer (CEO) of Airtel Africa; Raghunath Mandava, “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 Chief Executive Officer (CEO); Raghunath Mandava added that, “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.”
The new deal is one more step in the right direction in Airtel’s journey towards increasing its minority shareholding, as well as its target of an Initial Public Offering (IPO) in the next 4 years which will essentially provide Airtel Mobile Commerce BV company with ownership and the operation of Airtel’s mobile money in 14 African countries.
The Mastercard and TPG deals are aimed towards the larger scheme of Airtel Africa goal of increasing investment opportunities and strategic asset monetisation, as well as the final goal of reducing its debt.
Airtel Africa apart from selling as much as 25 percent of the minority stake in its mobile money aspect, is also selling of its 1424 towers in Malawi and Madagascar for a total of 129 million United States Dollars. The Airtel Africa has also signed agreements with Helios regarding the trade or sale of towers in Gabon and Chad.
The Chief Executive Officer (CEO) of Airtel Africa; Raghunath Mandava said, “With today’s announcement, we are pleased to welcome Mastercard as an investor in our mobile money business, joining The Rise Fund which we announced two weeks ago. 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.”
The money from the Mastercard, Helios, and TPG deals will be channeled towards reducing the debt of the group, and also finance more investments into sales infrastructure and network infrastructure in countries where it operates.
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