MTN Group to Spin Off Fintech Business for Mastercard Acquisition

MTN Group Ltd. will spin off its fintech operations in Nigeria, Ghana, and Uganda to allow Mastercard to acquire a minority stake. This strategic move is prompted by the rising demand for mobile financial services. The stake may be valued at $200 million, with the fintech unit estimated at $5.2 billion. MTN also plans to increase dividends amidst these developments.

MTN Group Ltd. intends to spin off its financial technology operations in Nigeria, Ghana, and Uganda within the first half of the year. This reorganization is a strategic move to facilitate Mastercard Inc.’s acquisition of a minority stake in these rapidly expanding fintech sectors, as confirmed by Chief Executive Officer Ralph Mupita in a statement to Bloomberg.

The increasing reliance of Africa’s youthful, tech-savvy population on mobile phones for financial services has led to significant growth in the fintech market. MTN has experienced a 35% increase in mobile-money transactions, amounting to over $320 billion, reflecting this trend in consumer behavior.

Mastercard’s investment stake is projected to reach approximately $200 million, valuing MTN’s fintech unit at around $5.2 billion. The specifics of the deal will be revealed upon its finalization. As of now, the spin-off processes are more developed in Uganda and Ghana, while Nigeria’s complexities involve additional regulatory considerations, Mupita noted.

In addition to the fintech spin-off, MTN is exploring network sharing agreements, similar to those being implemented in European markets, as shared by the CEO. As Africa’s leading carrier by revenue, MTN declared a dividend of 3.45 rand (0.19 cents) per share for 2024, exceeding analyst expectations of 3.35 rand, with plans for a higher payout of at least 3.70 rand per share for the current financial year.

MTN Group Ltd. is undertaking a strategic spin-off of its fintech operations in key African markets to support Mastercard’s investment. The move reflects the burgeoning growth of mobile financial services among Africa’s young population. By separating its fintech units, MTN aims to facilitate this minority stake acquisition while also considering network sharing models, underlining its position as Africa’s largest telecommunications company. With promising financial results, MTN is committed to delivering value to its shareholders through increased dividends.

Original Source: businessday.ng