Airtel Africa, one of the continent’s leading providers of telecommunications and mobile money services, has announced the introduction of Chimera Investment LLC as an additional investor in Airtel Mobile Commerce BV (‘AMC BV’), through a $50m secondary purchase of shares of AMC BV.
According to a notice to the Nigerian Exchange Group (NGX) on Thursday, the transaction is a continuation of the Group’s pursuit of strategic asset monetisation and investment opportunities.
Chimera Investment LLC, through its subsidiary Chimetech Holding Ltd., now holds a minority stake in AMC BV alongside the other minority investors, with Airtel Africa continuing to hold the majority stake. Chimera is an Abu Dhabi-based private investment firm managing a diversified portfolio of listed and unlisted equities on both local and regional markets.
AMC BV is the holding company for several of Airtel Africa’s mobile money operations and ultimately is intended to own and operate the mobile money businesses across all of Airtel Africa’s fourteen operating countries.
“Airtel Africa aims to explore the potential listing of the mobile money business within four years,” the notice by Airtel Africa states, adding that “the proceeds from the Transaction will be used to reduce Group debt and invest in network and sales infrastructure in the respective operating countries.”
The profits before tax in the full year ended 31 March 2021 and the value of gross assets as of that date, attributable to Airtel Africa’s mobile money businesses were $185m and $668m, respectively.
The Central Bank of Nigeria recently granted approval in principle to Airtel Africa to operate payment service banks, with final approval to follow in six months, subject to specific requirements.
According to BusinessDay estimates, 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.
However, analysts do not expect Airtel Africa to replicate its mobile money success in other markets in Nigeria due to the competition in the already developed financial services industry in Africa’s most populous nation.
While AirtelTigo, Airtel Africa’s mobile money business in Ghana, is similar to what the telco can do in Nigeria, the payment service bank (PSB) permitted by the Central Bank of Nigeria does not give room for the operator to do as much as its Ghana counterparts.
Unlike in Ghana, Nigeria’s PSB operators cannot provide lending and insurance products. Also, their interest-bearing assets are limited to government and central bank-issued instruments. Lending, according to market analysts, can be a profitable add-on for digital payments providers and the restrictions on offering insurance and investment.