Airtel Africa is contemplating an initial public offering (IPO) for its mobile money unit, Airtel Money, with reports suggesting a potential valuation exceeding $4 billion. However, discussions surrounding the IPO are still in preliminary stages, leaving room for the company to decide against taking its fintech arm public.
Airtel Money stands out as Airtel Africa’s fastest-growing division, experiencing remarkable growth amidst challenging economic conditions. However, Airtel’s profits plummeted by nearly 99% in 2023 due to currency devaluation.
Nevertheless, airtel money recorded a substantial revenue growth of 31.8%. Notably, this growth was propelled by impressive performances in East Africa, with a revenue growth of 34.9%, and Francophone Africa, recording an 18.7% increase. Projections for 2024 anticipate airtel money transaction value to reach $56 billion, operating across 14 markets.
The possibility of an IPO for airtel money was initially hinted at in 2021, following substantial investments from TPG and MasterCard. TPG injected $200 million into the fintech arm, while MasterCard contributed $100 million, valuing the unit at $2.65 billion.
Discussions regarding the IPO have contemplated stock exchanges in various regions, including the United Arab Emirates, London, and other European markets. However, the final decision to proceed with the IPO rests with Airtel Africa, and crucial details such as timing and valuation are still subject to ongoing discussions.
Airtel Money’s expansion has been particularly notable in Nigeria, where the government has been actively promoting cashless payments. In 2023, the company witnessed a 19.5% increase in the number of mobile money customers, reaching a total of 37.5 million.
Airtel has attributed its growing network footprint as a key factor in attracting and retaining customers, instilling confidence among prospective subscribers.
Airtel Money has rapidly gained traction as a convenient and reliable platform for financial transactions, including money transfers and bill payments, across multiple African markets.
With its user-friendly interface and widespread accessibility, airtel money has become synonymous with seamless digital transactions. It offers customers the flexibility to transfer funds, pay bills, and even withdraw cash at designated agents.
Additionally, airtel money’s competitive fee structure and transparent pricing have positioned it as a preferred choice for millions of users seeking cost-effective and efficient money transfer solutions.
As digital financial services continue to gain prominence, airtel money transfer online capabilities further enhance its appeal. It enables users to conduct transactions conveniently from their smartphones or computers.
Nevertheless, some observers have raised concerns about the sustainability of Airtel’s growth trajectory, particularly in light of its negative cash flows.
While Airtel’s high Return on Equity (ROE) and Return on Capital Employed (ROCE) signify efficient capital utilization and return generation, its leverage could potentially amplify losses.
The potential IPO for Airtel Money not only highlights the company’s commitment to capitalizing on its fastest-growing division. It also emphasizes the growing importance of fintech in Africa’s digital economy.
By tapping into public markets, Airtel Africa aims to unlock value and provide investors with an opportunity to participate in the region’s burgeoning mobile money sector.
