Airtel acquires YTS Solutions, names ?Manish Khera as CEO of Airtel Money

Bharti Airtel has bought financial products company YTS Solutions and named the startup's co-founder and MD Manish Khera chief executive officer of Airtel Money.

The move comes at a time when India's top carrier is striving to strengthen its presence in the fast growing mobile commerce space.

The acquisition, the first such by an Indian telco in the mobile commerce segment, will help in expanding the portfolio of Airtel Money, a mobile wallet, even as the telco awaits the Reserve Bank of India's decision on its application for a payments bank licence.

The buy for an unspecified amount will bring in a host of new product capabilities targeted at migrants in urban cities and their families in rural towns and villages, driving financial inclusion, Airtel said in a statement on Monday.

"With Airtel's large customer base, nationwide presence and existing infrastructure, we believe there are synergies which will strengthen the entity's position in the mobile payments industry," YTS Co-founder and CEO Shweta Aprameya said in a separate statement.

The acquisition is the first of its kind among telecom service providers who offer mobile wallets. For example, Vodafone has M-Pesa, Idea Cellular has Idea Money and Tata Teleservices has MRupee, and all of them compete with the likes of PayTm, MobiKwik, PayU and Oxigen for a share of the fast growing mobile commerce pie.

Digital wallets, which allow consumers to pay for purchases through devices such as mobile phones, are becoming hugely popular in India, as indicated by an almost three-fold surge in the number of such transactions recorded between February and April.

The increasing popularity has meant huge investment interest in companies offering such services. For instance, Paytm raised $200 million (nearly Rs1,300 crore) from Ant Financial, an Alibaba Group firm that controls its Alipay arm, in February this year in exchange for a 25% stake. It is also in talks to sell an additional stake to raise a further $600 million. This could see Paytm being valued at $3.7 billion (Rs 23,600 crore) on a post money basis, a 270% increase on the $1-billion valuation in the previous funding round.

The segment is set to heat up further with the entry of Reliance Jio, which is expected to launch its own wallet service called Jio Money. Smaller rival Aircel has also secured a five-year pre-paid mobile wallet licence.

YTS, the nearly two-year old start-up, has developed innovative financial products focused on mass market and micro-transactions. YTS' payments and remittance businesses will be integrated with Airtel M-Commerce Services Ltd (AMSL), a wholly-owned subsidiary of Airtel that operates under the Airtel Money brand. AMSL is the entity which has applied for the payments banking licence. Kotak Mahindra Bank Ltd is slated to pick up 19.90% in AMSL, subject to regulatory approvals.

"His (Khera) rich domain expertise will add immense value to our plans and help lead our mobile commerce and payments business to reach millions of underserved Indians," said Gopal Vittal, MD and CEO of Bharti Airtel, India & South Asia, on Khera's appointment.

AMSL launched Airtel Money in 2011 as India's first pre-paid mobile wallet by a telecom services provider. While Bharti Airtel does not share details about Airtel Money's India customer base, it recently launched cross-border money transfer service for its mobile wallet customers in Niger, Africaa first in the country by a telecom company.

In Africa, Airtel Money had a customer base of 6.2 million as of March this year, up 76.4% on year.

SOURCE:ETTELECOM