MTN Group plans to spin off its fintech units in Nigeria, Ghana, and Uganda by H1 2025 to allow Mastercard to acquire a minority stake. The reorganization involves navigating regulatory complexities in Nigeria while progressing in Ghana and Uganda. The fintech unit’s valuation stands at $5.2 billion, with Mastercard expected to invest up to $200 million. Despite financial losses, MTN plans to increase dividends, signaling confidence in future growth.
MTN Group has announced intentions to divest its financial technology (fintech) operations in Nigeria, Ghana, and Uganda by the first half of 2025. This strategic move will facilitate Mastercard Inc.’s minority acquisition in these rapidly expanding units. MTN’s Chief Executive Officer, Ralph Mupita, shared details of this initiative during an interview with Bloomberg, emphasizing the necessity of separating the fintech units to finalize the agreement established with Mastercard in 2023.
The spin-off process is progressing more swiftly in Ghana and Uganda than in Nigeria, which poses additional regulatory challenges. Mupita remarked, “Nigeria has a bit more complexity with some more regulatory processes to work through.” MTN remains steadfast in its commitment to completing the reorganization within these three markets, notwithstanding the hurdles in Nigeria. Furthermore, MTN is advancing initiatives to explore network-sharing agreements, a trend that is gaining traction in European markets, potentially lowering infrastructure costs and enhancing service quality.
The agreement with Mastercard values MTN’s fintech unit at approximately $5.2 billion, with the payments company projected to invest up to $200 million. Upon announcing the 2023 acquisition and commercial agreement with Mastercard, MTN stated, “Following the bespoke process to identify and potentially introduce strategic minority investors into MTN Group Fintech, we executed commercial agreements with Mastercard…” This partnership aims to propel the growth of MTN’s fintech services in payments and remittances. Moreover, a memorandum of understanding between MTN and Mastercard has been established, outlining the minority investment based on a valuation of roughly $5.2 billion, free of debt. The definitive investment agreements are anticipated to be signed imminently, subject to standard closing conditions.
In terms of financial performance, MTN, recognized as Africa’s largest telecommunications provider by sales, has disclosed a loss of 9.59 billion rand for the fiscal year ending December 31, 2024, surpassing the earlier estimated loss of 3.87 billion rand. The company has also announced a dividend of 3.45 rand per share for 2024 and plans to raise the dividend payout to at least 3.70 rand per share in the upcoming financial year, reflecting its confidence in future growth and financial prospects.
In conclusion, MTN Group’s strategy to spin off its fintech operations in Nigeria, Ghana, and Uganda is a significant step towards facilitating a minority stake acquisition by Mastercard. While there are regulatory challenges, MTN remains committed to completing the process. The partnership with Mastercard reinforces MTN’s growth ambitions in the fintech space, and the company’s recent financial disclosures highlight ongoing adjustments amidst losses while maintaining future dividend increases, suggesting an optimistic outlook for its operations.
Original Source: nairametrics.com
