In 2020, there were 1.2 billion registered mobile money accounts globally, with the industry processing $2 billion daily. A significant portion of this growth is driven by mobile money users in Africa.
While Africa represents a substantial market for mobile money, the Sub-Saharan (SSA) region is the epicenter of this activity. SSA added 50 million new mobile money accounts in 2019 alone.
Remarkably, out of the 300 million monthly active mobile money users worldwide, 159 million are in SSA. This growth in users is translating into increased revenues for telcos like Airtel Africa, which offers mobile money services across the continent.
Increasing Mobile Money Revenues
Airtel Africa is experiencing growth in its mobile money services. According to the company’s latest financial results, mobile money generated $110 million in revenues in Q4 2020.
This marks a 62.72% increase from Q2, where mobile money revenue was $67.6 million.
For Airtel Africa, this growth is a reason to invest heavily in its mobile money business, now operating under a holding company called Airtel Mobile Commerce BV (AMC BV). AMC BV oversees all of Airtel’s mobile money operations across 14 countries.
With its revenue growth and a recent valuation of $2.65 billion, the long-term goal is to eventually take AMC BV public. However, increasing revenue and expanding its services across the continent are prerequisites.
In 2020, Airtel Money’s customer base grew by 29.6% over six months, reaching 20.1 million, which now constitutes about 17.3% of its total customer base. Mobile money contributes 10% to the group’s revenue.
Airtel Africa has ambitious growth plans, aiming to drive overall revenue growth through mobile and data services, even as voice revenue declines. To fund this expansion, Airtel Africa has sold 11.25% of its mobile money business to two companies.
Growth and Equity Sales
According to Airtel’s 2020 annual report released in February, “the Group is in discussions with various potential investors regarding possible minority investments in Airtel Money.”
A month later, it sold a 7.5% stake in its mobile money business to US private equity firm TPG for $200 million. Three weeks later, it sold another 3.75% stake to payment giant Mastercard for $100 million.
Airtel aims to grow its mobile money business without incurring additional debt. At the end of 2018, the company’s debt was $7.7 billion, and it has been focused on reducing that figure.
Debt Reduction Focus
One of Airtel’s objectives in recent years has been debt reduction. Its listing on the London Stock Exchange in 2019 allowed it to reduce debt to $3.5 billion.
Additionally, the company is preparing for bond repayments, with $890 million due in May and another $505 million due in March 2023.
These repayments are part of the reason Airtel is divesting its tower assets in Chad, Gabon, Madagascar, Malawi, and Tanzania. In March, the company signed an agreement with Helios Towers Plc to sell 1,229 towers in Madagascar and Malawi for $108 million.
Airtel Africa has also entered into memorandums of understanding (MoUs) for the potential sale of 1,000 tower assets in Chad and Gabon to Helios Towers. The deal is expected to be completed before the end of the next financial year.
