MTN Group plans to separate its fintech operations in Nigeria, Ghana, and Uganda by mid-2025 to allow Mastercard to acquire a minority stake. Issues in Nigeria highlight regulatory complexities, but MTN remains focused on concluding the reorganization. A $5.2 billion valuation has been assigned to the fintech unit, with implications for future financial performance and dividend enhancements.
MTN Group, a leading telecommunications provider, 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 burgeoning fintech sectors. MTN’s Chief Executive Officer, Ralph Mupita, shared insights on this plan during a Bloomberg interview.
To complete the Mastercard acquisition, MTN must divest its fintech units in these three markets, a requirement stemming from a deal established in 2023. In Ghana and Uganda, the spin-off process is relatively advanced, whereas Nigeria encounters more regulatory hurdles, according to Mupita, who remarked on the complexity of regulatory procedures in that country. Despite the challenges in Nigeria, MTN is dedicated to finalizing the restructuring in all targeted markets.
In conjunction with its fintech initiatives, MTN is also looking into network-sharing agreements, a strategy expected to reduce infrastructure costs and enhance service delivery, mirroring practices already common within European telecommunications.
The partnership with Mastercard values MTN’s fintech division at $5.2 billion, with Mastercard planning to invest up to $200 million. During the 2023 announcement of this acquisition, MTN emphasized that commercial agreements with Mastercard were essential for promoting the growth of its payment and remittance services. Furthermore, the definitive investment agreements are anticipated to be finalized soon, following customary due diligence processes.
Additionally, MTN’s recent financial results for the year ending December 31, 2024, revealed a loss of 9.59 billion rand, which was higher than the projected loss of 3.87 billion rand. Subsequently, the company declared a dividend of 3.45 rand per share and plans to increase this to at least 3.70 rand in the upcoming financial year, illustrating its confidence in future growth and performance.
MTN Group aims to enhance its fintech operations by spinning off units in Nigeria, Ghana, and Uganda to accommodate a minority investment from Mastercard. Despite regulatory challenges in Nigeria, MTN remains committed to this restructuring plan and is simultaneously pursuing network-sharing agreements. The financial outlook indicates both challenges and confidence, with planned increases in dividends reflecting the company’s strategy for sustained growth in the telecommunications sector.
Original Source: nairametrics.com
