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Airtel Africa to sell 7.5% stake in mobile money unit to QIA for $200 million

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Airtel Africa has inked a deal to sell roughly a 7.5% stake in its mobile money unit to Qatar Holding LLC, an affiliate of theQatar Investment Authority(QIA), for around $200 million. This is the latest in a spate of fundraising activities by Sunil Mittal-led to cut debt and raise fresh resources to ramp 4G networks with an eye on an imminent 5G spectrum sale.

Infusion by Qatar’s sovereign wealth fund will happen via one of Airtel Africa Plc’s wholly-owned arms, Airtel Mobile Commerce BV (AMC BV), the holding company for several of Airtel Africa’s mobile money operations. AMC BV will eventually own and operate such mobile money businesses across Airtel Africa’s 14 operating countries once inclusion of these businesses under AMC BV is concluded.

Airtel Africa’s latest deal with QIA comes a few months after it had inked a similar transaction to sell roughly a 3.75% stake in its mobile money unit to global payment processor, Mastercard Inc, for $100 million. And before the Mastercard deal, it had sold a 7.5% stake in its mobile money business to US private equity firm, TPG for $200 million.

“QIA will hold a minority stake inAMC BVupon completion of the transaction (alongside other minority investors), with Airtel Africa continuing to hold the majority stake,” Airtel Africa Plc said in an official statement late Friday evening. The transaction is subject to customary closing conditions. At press time, Airtel Africa did not reveal the deal size.

Airtel Africa said the transaction proceeds “will be used to reduce group debt and invest in network and sales infrastructure in the respective operating countries”.

It added that the deal with QIA is a continuation of the group’s pursuit of strategic asset monetisation and investment opportunities, and it’s the aim of Airtel Africa to explore a potential listing of the mobile money business within four years.

“We are pleased to welcome QIA as a prospective investor in our mobile money business, joining both Mastercard andTPG’s The Rise Fundas a further partner to help us realise the full potential from the substantial opportunity to bank the unbanked acrossAfrica,” Airtel Africa CEO Raghunath Mandava said in an official statement.

Airtel Africa’s deal with QIA will close in two stages – $150 million will be invested at first close once the transfer of sufficient mobile money operations and contracts into AMC BV has been completed, with $50 million to be invested at second close upon further transfers. The investment will happen through a secondary purchase of shares in AMC BV from Airtel Africa.

The deal’s first close is expected in August. “From first close, QIA will be entitled to appoint a director to the board ofAMC BVand to certain customary information and minority protection rights,” Airtel Africa said.

Airtel needs funds not just to expand 4G operations to fight rival, Reliance Jio, but also pay off a total Rs 43,980 crore in adjusted gross revenue (AGR) dues to the government and also build a war-chest to buy airwaves in a potential 5G sale. The government is yet to schedule what will be India’s maiden 5G auction.

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