MTN Group plans to spin off its fintech operations in Nigeria, Ghana, and Uganda by mid-2025, enabling Mastercard to acquire a minority stake. Regulatory complexities in Nigeria may pose challenges. The fintech operations are valued at $5.2 billion, with Mastercard set to invest up to $200 million. MTN’s recent financial results showed a loss, but indicated plans for a higher dividend payout.
MTN Group has unveiled its intention to separate its financial technology (fintech) operations from its telecommunications business in Nigeria, Ghana, and Uganda by the first half of 2025. This strategic decision will facilitate a minority stake acquisition by Mastercard Inc. in these high-growth units, as disclosed by MTN CEO Ralph Mupita during a Bloomberg interview.
The spinoff process is progressing more swiftly in Uganda and Ghana compared to Nigeria, which faces additional regulatory complexities. Mupita emphasized that the situation in Nigeria is characterized by “a bit more complexity with some more regulatory processes to work through.” Despite these challenges, MTN is resolute in its commitment to successfully reorganize its operations across all three nations.
In tandem with its fintech initiatives, MTN is evaluating network-sharing agreements, a strategy aligned with existing trends in European telecommunications. This approach aims to reduce operational costs and enhance service delivery.
The agreement with Mastercard values MTN’s fintech unit at $5.2 billion, with Mastercard poised to acquire a stake worth up to $200 million. MTN articulated its intentions regarding this acquisition alongside a commercial agreement 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.”
MTN, recognized as Africa’s largest telecommunications provider by sales, published its financial results for the fiscal year ending December 31, 2024, revealing a loss of 9.59 billion rand. This loss exceeded expectations, which estimated a loss of 3.87 billion rand. The Company has also announced a dividend of 3.45 rand per share for 2024 and indicated plans to boost this payout to at least 3.70 rand per share for the upcoming financial year.
In summary, MTN Group is poised to strategically spin off its fintech operations in Nigeria, Ghana, and Uganda to enable a minority stake acquisition by Mastercard. The complexity of regulatory requirements, particularly in Nigeria, presents challenges; however, MTN remains committed to the reorganization. The projected valuation of MTN’s fintech unit reflects its growth potential, while MTN’s financial results suggest a strong recovery trajectory and confidence in ongoing profitability.
Original Source: nairametrics.com
