MTN, Africa’s largest cellphone operator, has partnered with Rocket Internet, an internet incubator, and Stockholm-listed Millicom International Cellular to develop e-commerce businesses across the continent.
The partnership will result in MTN, Millicom and Rocket Internet each holding a 33.3% stake in Africa Internet Holding (AIH).
While still subject to regulatory approval, the parties expect the transaction to close during the second quarter of next year. AIH’s portfolio of assets includes Easy Taxi, an application that helps customers call a taxi and Lamudi, the online real estate portal.
Africa is seen as a growing market when it comes to internet usage. According to the World Bank Africa Development Indicator 2012-13 report, of the 89-million recorded internet users in sub-Saharan Africa, half were in Nigeria.
The report found that Kenya and Nigeria accounted for 62% of internet users, and Seychelles had the highest number of internet users per 100 people.
"We are excited to engage in a strategic partnership with Rocket Internet and Millicom to develop online ventures across the fast-growing internet markets of Africa," said MTN group president and CE Sifiso Dabengwa.
"Rocket Internet’s proven successful track record, coupled with Millicom and MTN’s leading mobile telecommunications position, will allow the partnership to capture the growth potential of the digital media space across our footprint in the region," Mr Dabengwa added.
Combined, the three units will have more than 220-million mobile customers on the continent.
Millicom president and CEO Hans-Holger Albrecht said: "MTN is the leader in Nigeria and South Africa, the largest markets for AIH currently, while Millicom contributes through its leading positions in our markets, combined with one of the most innovative product offerings".
Since its formation in 1994 MTN has become one of the leading emerging market operators on the continent, with subscribers in 22 countries spanning Africa, Asia and the Middle East.
However, the group’s rapid expansion into emerging markets has added a layer of risk to the company’s profile.
While ratings agency Moody’s Investors Service affirmed the group’s Baa2 rating on Monday, it also changed its outlook from positive to stable.
"Today’s change … predominately reflects MTN’s increasing exposure to riskier markets, which is tempering any possible upward rating pressure, despite MTN’s strong and stable consolidated credit metrics over the past few years," said Moody’s vice-president and senior analyst Dion Bate.
"MTN’s exposure to the risks within the political, social, regulatory and economic environments in the key countries in which it operates, such as South Africa and Nigeria, are important drivers for MTN’s ratings," said Mr Bate.