MTN Group Announces Spin-Off of Fintech Units for Mastercard Investment

MTN Group plans to spin off its fintech operations in Nigeria, Ghana, and Uganda by mid-2025 to enable Mastercard Inc. to obtain a minority stake. The spin-off is essential to finalize an agreement with Mastercard valued at $5.2 billion. CEO Ralph Mupita confirmed the commitment to reorganize despite regulatory challenges in Nigeria. MTN also seeks network-sharing agreements to enhance infrastructure efficiency while aiming to increase its dividend payouts for improved financial performance.

MTN Group has declared intentions to spin off its financial technology (fintech) divisions in Nigeria, Ghana, and Uganda by the first half of 2025. This strategic move is designed to facilitate Mastercard Inc.’s acquisition of a minority stake in these dynamic business units. CEO Ralph Mupita provided insights into this initiative during a recent Bloomberg interview, highlighting the necessity of separating these operations to finalize the previously negotiated agreement with Mastercard in 2023.

The spin-off process varies across regions, with advancements noted in Uganda and Ghana. However, Nigeria poses additional regulatory hurdles, as Mupita explains, stating that Nigeria presents “a bit more complexity with some more regulatory processes to work through.” Nonetheless, MTN remains dedicated to achieving the goal of reorganization in all three nations.

In addition to its fintech developments, MTN is also assessing network-sharing agreements, mirroring a trend observed in European telecommunications markets. Such collaborations may assist MTN in streamlining infrastructure expenditures and enhancing service delivery.

The partnership with Mastercard values MTN’s fintech segment at $5.2 billion, with the payments giant set to invest as much as $200 million. In 2023, MTN announced this acquisition deal along with a commercial agreement, noting, “Following the bespoke process to identify and potentially introduce strategic minority investors into MTN Group Fintech, we executed commercial agreements with Mastercard to support the acceleration and growth of our fintech business’s payments and remittance services.”

Furthermore, MTN mentioned, “The signing of the definitive investment agreements is expected to occur in the very near term… The closing of the investment will be subject to customary closing conditions.” Amid these developments, MTN disclosed its financial results for 2024, reporting a loss of 9.59 billion rand, exceeding earlier projections. The company declared a dividend of 3.45 rand per share, intending to increase it to at least 3.70 rand per share for the current fiscal year, reflecting confidence in future growth.

In conclusion, MTN Group’s decision to spin off its fintech units in Nigeria, Ghana, and Uganda is a strategic maneuver intended to facilitate a pivotal partnership with Mastercard. Despite challenges, particularly in Nigeria, MTN remains committed to this separation process. The anticipated minority stake acquisition by Mastercard is poised to enhance MTN’s financial technology operations. Furthermore, MTN’s positive outlook on dividend payouts signals a commitment to financial resilience and growth amidst ongoing transformations.

Original Source: nairametrics.com