London-listed Airtel Africa Plc has ceded a 25.77 percent stake in its local mobile money business as part of a continent-wide deal that has seen it raise $550 million from four institutional investors.
The multinational’s interest in Airtel Money Kenya Limited dropped to 74.23 percent in the year ended March from 100 percent a year earlier.
It also disclosed a similar reduction in ownership in Airtel Mobile Commerce (Kenya) Limited in the review period.
Similar changes in ownership of the mobile money businesses were also witnessed in markets such as Rwanda, Tanzania, and Zambia.
Airtel Africa has disclosed the share sale of the subsidiaries in its latest annual report as a prospect of a cashless Africa triggers a scramble for control of its payments platforms.
The record-breaking deal values Airtel Money at Ksh250 billion ($2.1 billion), indicates that the rival M-Pesa platform, available in Kenya and five other African markets such as Tanzania and Mozambique, could be valued even higher.
Airtel had earlier announced it was selling a minority stake in its mobile money business in Africa to raise cash, with the part of the funds used to reduce the group’s debt.
"We received a minority investment of $550 million from four investors in Airtel Mobile Commerce B.V.," the multinational says in the report.
"The Rise Fund invested $200 million, Mastercard $100 million, Qatar Holding LLC (QIA) $200 million and $50 million from Chimera Investment LLC."
In the agreements, the mobile money businesses were to be folded into the holding company Airtel Mobile Commerce B.V., which is registered in the Netherlands.
The multinational’s interest in Airtel Money Kenya Limited could drop further after the government passed a policy requiring the telco to sell at least a 30 percent stake in the business to local investors.
"Airtel Money Kenya Limited, which holds a Content Service Provider Licence from the Communications Authority of Kenya, with effect from November 2020, has three years from the date of the licence to comply with the requirement to have 30 percent local shareholding," the multinational said.
"Under the amended ICT policy, a licensee may apply to the Ministry for ICT for an extension to comply with the requirement, or obtain an exemption."
A similar rule also applies to Airtel Networks Kenya Limited, which provides cellular services and is currently fully owned by the multinational. The minority stakes sold in Airtel Money across the African markets signal the huge value of mobile financial service platforms.
M-Pesa’s reach recently spread to more than 200 countries after a deal with global payments firm Visa. M-Pesa is offered by Kenya’s Safaricom and by subsidiaries of South Africa’s Vodacom Group.
Airtel Money generated $553 million revenues in the African markets in the year ended March, while users of the platform stood at 26.2 million.
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