MTN Group to Spin Off Fintech Units for Mastercard Acquisition
MTN Group plans to spin off its fintech units in Nigeria, Ghana, and Uganda by mid-2025 to allow Mastercard to acquire a minority stake. CEO Ralph Mupita highlighted regulatory complexities in Nigeria, but the company remains focused on executing this strategy. The fintech unit is valued at $5.2 billion, with Mastercard expected to invest up to $200 million. MTN anticipates improving its dividend payout as it navigates through financial challenges.
MTN Group has revealed intentions to spin off its financial technology (fintech) units in Nigeria, Ghana, and Uganda in the first half of 2025. This strategic move aims to facilitate Mastercard Inc.’s acquisition of a minority stake in these rapidly developing sectors. CEO Ralph Mupita announced these plans during an interview with Bloomberg, emphasizing the necessity of separating the fintech businesses to finalize the agreement established with Mastercard in 2023.
Currently, the spin-off processes are progressing more swiftly in Uganda and Ghana, while Nigeria poses additional regulatory challenges. Mupita acknowledged Nigeria’s regulatory landscape, stating it involves “a bit more complexity with some more regulatory processes to work through.” MTN remains dedicated to completing the reorganization across all mentioned markets despite these obstacles.
Moreover, MTN is exploring network-sharing agreements, which align with common practices seen in European markets. This initiative aims to optimize infrastructure costs and enhance service quality. The deal with Mastercard values MTN’s fintech unit at $5.2 billion, with an anticipated stake acquisition worth up to $200 million.
In 2023, MTN announced the acquisition deal along with a commercial agreement with Mastercard, outlining the aim to introduce strategic minority investors into MTN Group Fintech. This cooperation is designed to expedite the growth of their payments and remittance services. The preliminary agreements include a term sheet indicating a minority investment by Mastercard, based on an enterprise valuation of approximately $5.2 billion.
Regarding recent financial performance, MTN, Africa’s largest telecommunications provider by sales, reported a loss of 9.59 billion rand for the year ending December 31, 2024, surpassing earlier projections of a 3.87 billion rand loss. The company also declared a dividend of 3.45 rand per share for 2024, with plans to increase it to at least 3.70 rand per share in the current financial year, reflecting optimism about future growth.
In summary, MTN Group’s decision to spin off its fintech units in Nigeria, Ghana, and Uganda aims to enhance growth prospects and facilitate a partnership with Mastercard. Despite regulatory challenges, particularly in Nigeria, MTN is committed to executing this plan while exploring network-sharing initiatives. The recent financial results indicate challenges, yet an intention to boost dividends signals potential confidence in the company’s recovery and expansion strategies.
Original Source: nairametrics.com
