MTN Group to Spin Off Fintech Units for Mastercard Investment

MTN Group plans to spin off its fintech operations in Nigeria, Ghana, and Uganda by mid-2025 to allow Mastercard to acquire a minority stake. Despite regulatory challenges in Nigeria, MTN is committed to the process and is exploring network-sharing agreements. The deal values MTN’s fintech unit at $5.2 billion with Mastercard expected to invest up to $200 million. Financial results indicate a loss but a planned increase in dividends reflects confidence in future performance.

MTN Group intends to separate its fintech operations in Nigeria, Ghana, and Uganda by the first half of 2025. This strategic decision is designed to facilitate Mastercard Inc.’s acquisition of a minority stake in these lucrative business units. MTN’s Chief Executive Officer, Ralph Mupita, shared this information in an interview with Bloomberg.

The spin-off is essential for completing a prior agreement made with Mastercard in 2023. In Ghana and Uganda, the process is more advanced, while Nigeria faces additional regulatory complications. Mupita acknowledged that Nigeria’s situation is “a bit more complex with some more regulatory processes to work through,” underscoring the challenges involved. Despite these hurdles, MTN remains dedicated to this reorganization initiative.

In addition to its fintech operations, MTN is looking into network-sharing collaborations, a strategy already gaining traction in Europe. This approach may allow the company to minimize infrastructure expenses while also enhancing service delivery across its networks.

The investment deal with Mastercard values MTN’s fintech segment at approximately $5.2 billion, with Mastercard poised to secure a stake worth up to $200 million. MTN disclosed this agreement alongside a commercial partnership with Mastercard, stating, “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 revealed that they signed a memorandum of understanding for Mastercard’s minority investment based on an enterprise valuation of about $5.2 billion. The execution of definitive investment agreements is anticipated shortly, contingent upon standard due diligence and customary closing conditions.

As of December 31, 2024, MTN reported a financial loss of 9.59 billion rand, which was higher than the estimated loss of 3.87 billion rand. Additionally, the company announced a dividend of 3.45 rand per share for the fiscal year and has indicated plans to raise this payout to at least 3.70 rand per share for the current year, reflecting confidence in its financial trajectory.

In summary, MTN Group’s spin-off of its fintech operations in Nigeria, Ghana, and Uganda represents a significant strategic realignment aimed at facilitating Mastercard’s investment in these businesses. Despite regulatory complexities, the company is committed to this initiative, alongside exploring network-sharing agreements. The partnership with Mastercard, valued at $5.2 billion, highlights MTN’s ambitions for growth in the fintech sector, while recent financial reports reflect its current fiscal challenges and intended recovery strategies.

Original Source: nairametrics.com