MTN Group plans to spin off its fintech operations in Nigeria, Ghana, and Uganda to facilitate Mastercard’s minority stake acquisition worth up to $200 million. This separation is part of a larger reorganization strategy. The fintech unit’s valuation stands at $5.2 billion, reflecting significant growth in mobile transactions. MTN also announced plans for higher dividends and is considering network sharing agreements.
MTN Group Ltd. intends to spin off its financial technology operations in Nigeria, Ghana, and Uganda within the first half of the year. This reorganization aims to facilitate Mastercard Inc.’s acquisition of a minority stake in these high-growth units, as stated by Chief Executive Officer Ralph Mupita. The separation is a requirement for completing a deal that was established in 2023 with Mastercard.
The growing trend of Africa’s young, tech-savvy population utilizing mobile phones for banking services has significantly bolstered the fintech sector for wireless carriers. In fact, MTN’s mobile-money transactions experienced a 35% increase in constant currency terms, surpassing $320 billion. This surge underscores the immense potential within the digital finance market.
The anticipated stake for Mastercard could reach as high as $200 million, and the valuation of MTN’s fintech unit is projected at $5.2 billion. While the separation processes are more advanced in Uganda and Ghana, Mupita noted that Nigeria presents additional regulatory complexities that require careful navigation.
Furthermore, MTN is exploring network sharing agreements, reflecting a trend observed in European telecom markets. As Africa’s largest carrier by sales, MTN recently declared a dividend of 3.45 rand (0.19 cents) per share for 2024, surpassing analysts’ average estimate of 3.35 rand. The company is also committed to increasing its dividend to at least 3.70 rand per share for the upcoming financial year, as detailed in their official statement on Monday.
In conclusion, MTN Group’s upcoming spin-off of its fintech operations in Nigeria, Ghana, and Uganda aims to enhance its strategic partnership with Mastercard. With significant growth in mobile-money transactions and plans for increased dividends, the company is well-positioned to capitalize on the expanding fintech sector in Africa while navigating complex regulatory landscapes. The developments indicate a promising future for MTN’s financial technology segments.
Original Source: businessday.ng
