FELICIA ITEJI
Airtel Africa is considering an initial public offering of its mobile money arm that could value it at more than $4 billion, according to reports.
The operator group is experiencing extreme turbulence. Last month it came very close to making a loss as its net profit plummeted by 99.6%. This was primarily down to Nigeria’s decision to unpeg the naira from the US dollar, sending the naira into freefall.
Airtel’s business in Nigeria posted a loss after tax of N137 billion for the 2023 financial year, despite its service revenue increasing 22.4% to N2.5 trillion.
Until the naira was unhitched from the dollar last summer, Nigeria was Airtel Africa’s most profitable market.
The mobile money business is the fastest growing part of Airtel. In the nine months to the end of last December, its customer base grew by 19.5% to 37.5 million. Revenues grew even faster, by almost 32% in constant currency terms in the same period.
The report says the operator could float the unit this year and is already in discussions with potential advisors. It is apparently also looking at stock exchanges from London to mainland Europe, the UEA and beyond for the flotation.
Perhaps investor’s in the mobile money service are keen to salvage their investment: in 2021 from Mastercard to the tune of $100 million and $200 million from TPG.
It was reported some considerations include London, the UAE, and Europe, Bloomberg reported Wednesday, citing sources with knowledge of the move.
Airtel Money needs to be separated from its parent as a standalone entity before it can attain the prestige of trading on a stock exchange.
Estimating the company at $4 billion is higher than its valuation of $2.65 billion in 2021, after receiving investments from TPG—$200 million—and Mastercard—$100 million—valuing the unit at $2.65 billion.
That implies the valuation of Airtel Money, the group’s fastest-growing subsidiary, has expanded by more than half since 2021.
In Nigeria, the pace of growth for the mobile money business has been quickened by the launch of its SmartCash Payments Service Bank (PSB), which has witnessed dramatic adoption in its two years of operation, helped by concerted efforts by the central bank to drive cashless transactions.
Reports quoted sources as saying both the plan to list the mobile money division this year and the valuation amount are tentative.
The development comes weeks after Airtel Africa reported a 99.6 per cent fall in net profit in the nine months to December, after a $484 million foreign exchange, driven by sharp devaluations of the Nigerian naira, nearly plunged it into a loss.
The company is currently in the middle of a share buyback to reacquire $100 million worth of its shares traded in the open market.
Africa’s burgeoning fintech landscape, coupled with a young population increasingly adopting digital banking solutions, presents a fertile ground for Airtel Money’s expansion.
As of the first half of 2024, Airtel Money recorded a transaction value of $56 billion across its operations in 14 markets, reflecting its significant market presence and potential for further growth.
