Debt cripples Airtel Mobile Commerce BV $300m fundraising move

The $3.53 million debt burden has crippled Airtel Mobile Commerce BV capital drive of N$300 million, forcing its parent company, Airtel Africa, to take over the fund raising.

Recall that the company had begun putting its minority shares up for sale, in a bid to avoid depending on debt for capital amid the rising debt burden.

During the fundraising round that lasted for about a year, The Rise Fund (TRF) and Mastercard offered $200 million and $100 million in return for a stake and directorial seat on the Airtel mobile money board.

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In a recent statement by Airtel Africa, both The Rise Fund and Mastercard have only invested $150 million and $75 million respectively in a secondary purchase of shares in AMC BV.

A further $50 million from TRF and $25 million from Mastercard will be invested in a second close (fundraising) upon further transfers of mobile money operations into AMC BV.

It was gathered that the accumulation of these investments will be pumped into Airtel Africa to reduce its debt burden which rose from $3.43 billion [quarter ended June 2020] to $3.53 billion, as at the end of June 2021.

It was learnt that during year-on-year, Airtel Africa’s local currency debt increased, while foreign debt dropped, but the hike in local debt caused interest rate to hit 5 percent, against the 4.7 percent recorded in the second quarter of 2020.

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In a statement released to the investing public in Nigeria – its largest market – Airtel Africa said, “The proceeds from these transactions will be used to reduce Group debt and invest in network and sales infrastructure in the respective operating countries.”

The company is also planning to use earnings from the sale of its towers in Tanzania to settle rising debt.