MTN joins Millicom and Rocket Internet to build Africa’s leading Internet company

Millicom, the international telecommunications and media company (Stockholmsbörsen: MIC) and Rocket Internet have signed an agreement to partner with MTN to develop their African online company AIH. Together the three companies will fast track the development of AIH leveraging on MTN’s and Millicom’s highly complementary footprints in Africa and Rocket Internet’s know-how in online services.

[quote_box_center]Africa Internet Holding will become an associate of Millicom, MTN and Rocket Internet with each partner owning one third of the share capital and having equal representation on the Board of the company.[/quote_box_center]

AIH offers a broad range of services from real estate classifieds to electronics marketplace, food delivery to fashion e-commerce and hotel booking to taxis ordering. It is now active in 13 African countries. In the past twelve months, AIH has accelerated its development and launched six new ventures (Hellofood, Kaymu, Lamudi, Carmido, Easy Taxi and Jovago) and entered nine new markets (Kenya, Senegal, Ghana, Uganda, Rwanda, Algeria, Tanzania, Tunisia and Ivory Coast). In less than one year, Jumia, the African leading online retailer, has become the #1 online retailer in five major African countries (Nigeria, Egypt, Kenya, Morocco and Ivory Coast). In October 2013, Jumia has been awarded the “Best new retailer launch of the year” at the prestigious “World Retail Awards”, making it the first African company to ever be awarded. The latest initiatives from AIH include the launch of Kaymu, Africa’s leading marketplace, in Ghana and the integration of Millicom’s mobile financial services product with AIH services in Rwanda and Tanzania.

Commenting on the transaction, Sifiso Dabengwa, MTN Group President and CEO, said: “We are pleased to engage in a strategic partnership with Rocket Internet and Millicom to develop online ventures across the fast growing internet markets of Africa. Rocket Internet’s proven successful track record, coupled with Millicom’s and MTN’s leading mobile telecommunications position, will allow the partnership to capture the growth potential of the digital media space across our combined footprint”

Oliver Samwer, co-founder of Rocket Internet further added: “The strategic partnership between Rocket Internet, Millicom and MTN is unique and will enable AIH to reach more consumers with better services. We feel very strong about AIH existing and future ventures in Africa and look forward to working with our new partner.”

Commenting on the agreement today, Millicom President & CEO, Hans-Holger Albrecht said: “We are pleased to welcome MTN as a strategic partner to accelerate the growth of our online alliance in Africa. It is a significant vote of confidence in its future. Between us we have more than 220 million mobile customers in the continent with very limited overlap. 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.”

He continued “One year after first investing in these ventures, we are more convinced than ever about the potential for African online services to grow strongly and leapfrog traditional retail. We are at the same time extremely positive about the synergies between running a mobile business and offering online services, through the opportunities to leverage the distribution network, the customer base and the payment infrastructure. With MTN and Rocket Internet, we will accelerate the development of AIH to benefit all customers.”

Today’s agreement is subject to customary closing conditions, including necessary regulatory approvals, and expected to be completed in Q2 2014.

The previous agreement between Millicom and Rocket Internet signed in August 2012 has been amended to exclude Africa Internet Holding for which relationships between partners will now be governed by this new agreement. As a consequence Millicom will consolidate AIH using the equity method, no longer fully consolidating AIH revenues and EBITDA, in line with its equity ownership of the business.