Airtel Africa’s mobile money revenues could double when it begins its Payment Service Bank (PSB) operations in Nigeria, according to BusinessDay estimates, bolstering the telecommunication giant’s profitability and leading to a higher share price.
Airtel, Nigeria’s second-largest telco by number of subscribers, could make an additional $405 million a year from mobile money operations in Nigeria, more than the $401 million it made in total mobile money revenues last year.
BusinessDay arrived at this estimate by multiplying the telco’s average mobile money revenue per user in the African markets where it already operates by the potential number of mobile money users the telco could have in Nigeria.
In deriving the potential number of Airtel’s mobile money users in Nigeria, BusinessDay found the average penetration rate in existing African markets.
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The mobile penetration rate is the percentage of Airtel mobile subscribers who use mobile money in those markets. BusinessDay then used a percentage and applied it to the current number of subscribers in Nigeria.
An average of 35.68 percent of total Airtel mobile subscribers were mobile money users as at the end of September 2021, according to the company’s financial statement.
The highest penetration rate was in Gabon, where 65 percent of mobile subscribers use mobile money while the lowest was Rwanda with 13.2 percent.
If 35.68 percent of Airtel’s mobile subscribers in Nigeria, which the Nigerian Communications Commission (NCC) put at 50.6 million users as at June 2021, use mobile money services when it launches, then 18.1 million Nigerian users could emerge.
The potential Nigerian users make up 75 percent of Airtel Africa’s current total mobile money users (23.9 million).
Read also: MTN Nigeria, Airtel PSBs to create 1m direct jobs
Those 18.1 million people could add revenues of $33 million a month to Airtel’s top line considering that the telco’s mobile money Average Revenue Per User (ARPU) is currently $1.87 per month, according to data from its latest financial report.
At $33 million a month, Airtel Africa could be declaring $405 million a year from mobile money operations in Nigeria alone which is even higher than the total of N401 million declared in the whole of last year.
The only caveat to the revenue estimate is that the nature of Airtel’s mobile money operations in other markets would differ from its Nigeria operations given that it can not lend or offer insurance products in Nigeria.
However, the high financial inclusion rate in Nigeria, Africa’s most populous nation, compared to Airtel’s other markets could make up for that. Also the bulk of Airtel’s mobile money revenues don’t come from the services it would be providing in Nigeria.
Cash-in-cash-out services contribute the bulk of mobile money revenues, contributing to 55.7 percent as at the end of September 2021.
Customers using their mobile money accounts to top up their GSM contribute the second-highest revenues at 14 percent.
People using their accounts to pay bills or for merchant services account for 10.8 percent while P2P services contribute 9.8 percent of mobile money revenue.
Investors seem to be well aware of the impact of mobile money operations of Airtel Africa’s revenues and have bided the stock higher since the announcement of the PSB licence.
Airtel Africa shares are up 12.8 percent since the announcement, adding N376 billion to the telco’s market capitalisation.
