MTN Plans Fintech Spin-Off to Facilitate Mastercard Partnership

MTN Group Ltd. plans to spin off its fintech operations in Nigeria, Ghana, and Uganda to enable Mastercard to acquire a minority stake valued at up to $200 million. The fintech unit is estimated to be worth $5.2 billion, with MTN reporting a significant rise in mobile banking transactions. Furthermore, MTN seeks network sharing opportunities and plans to increase its dividend for the upcoming financial year.

MTN Group Ltd. is actively moving to spin off its financial technology operations in Nigeria, Ghana, and Uganda during the first half of the year. This reorganization is strategically aimed at facilitating a deal with Mastercard, which intends to acquire a minority stake in MTN’s high-growth fintech units, as stated by CEO Ralph Mupita to Bloomberg.

The surge in the use of mobile technology among Africa’s younger, tech-savvy population has led to increased mobile banking services. MTN experienced a 35% rise in mobile-money transactions, surpassing $320 billion, thereby highlighting the lucrative potential within the fintech sector for wireless carriers.

Mastercard is expected to acquire a stake valued at up to $200 million, with the full particulars to be disclosed upon deal completion, which places the fintech unit’s valuation at approximately $5.2 billion. While the separation processes are more advanced in Uganda and Ghana, Nigeria presents additional regulatory complications, necessitating further attention, according to Mupita.

In addition to the fintech spin-off, MTN is exploring opportunities for network sharing partnerships as part of a broader trend observed in European telecommunications markets. The group, recognized as Africa’s largest carrier by sales, announced a dividend of 3.45 rand (approximately 0.19 cents) for 2024, surpassing the estimated average of 3.35 rand predicted by analysts. Furthermore, the company anticipates increasing its dividend to a minimum of 3.70 rand per share in the upcoming financial year, as conveyed in a recent statement.

In summary, MTN Group Ltd. is poised to spin off its financial technology operations in Nigeria, Ghana, and Uganda to facilitate a strategic partnership with Mastercard. This move reflects the growing demand for mobile banking services within Africa’s evolving fintech landscape. The anticipated $200 million stake from Mastercard further underscores the significance of this fintech division, which is valued at $5.2 billion. Additionally, MTN’s plans to enhance dividends illustrate its positive financial outlook despite market challenges.

Original Source: businessday.ng