MTN Group plans to spin off its fintech operations in Nigeria, Ghana, and Uganda by mid-2025 to facilitate a stake for Mastercard. The effort is part of a strategic reorganization amidst regulatory challenges in Nigeria. The agreement values MTN’s fintech unit at $5.2 billion, with a commitment to enhance infrastructure via network-sharing arrangements. Additionally, MTN aims to increase its dividend payout following significant losses reported for 2024.
MTN Group has announced its intention to spin off its financial technology (fintech) operations in Nigeria, Ghana, and Uganda during the initial half of 2025. This strategic maneuver is designed to facilitate Mastercard Inc.’s acquisition of a minority stake in these burgeoning units. MTN’s CEO, Ralph Mupita, communicated these developments during a recent interview with Bloomberg, emphasizing the necessity of separating the fintech businesses to complete the deal established with Mastercard in 2023.
The spin-off initiatives are reportedly more advanced in Uganda and Ghana compared to Nigeria, where the regulatory environment poses additional complexities. Mupita remarked that Nigeria presents “a bit more complexity with some more regulatory processes to work through.” MTN has affirmed its commitment to pursuing the reorganization in all three countries despite these challenges.
In conjunction with its fintech ambitions, MTN is also considering network-sharing agreements, which aligns with current trends observed in European markets. This strategy aims to enhance infrastructure cost efficiency and improve service delivery.
The agreement with Mastercard values MTN’s fintech unit at approximately $5.2 billion, with the payments entity poised to acquire a stake valued at up to $200 million. During the announcement in 2023, MTN stated: “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.”
Furthermore, MTN revealed that a memorandum of understanding has been established with Mastercard, facilitating a minority investment into Group Fintech, with a firm enterprise valuation of around $5.2 billion on a cash and debt-free basis. It is anticipated that the signing of definitive investment agreements will occur shortly, as they approach the completion of standard due diligence processes, subject to customary closing conditions.
Noteworthy is that MTN, recognized as Africa’s largest telecommunications provider by revenue, recently disclosed its financial results for the year ending December 31, 2024. The company recorded a loss of 9.59 billion rand for that period, exceeding the projected loss of 3.87 billion rand. Additionally, MTN declared a dividend of 3.45 rand per share for 2024 and intends to raise its dividend payout to at least 3.70 rand per share for the current fiscal year, underscoring confidence in its financial trajectory and growth outlook.
In summary, MTN Group is set to spin off its fintech operations across Nigeria, Ghana, and Uganda by mid-2025 as part of a strategic move to allow Mastercard to invest in these units. Despite regulatory hurdles in Nigeria, MTN remains dedicate to the reorganization. The Mastercard deal values MTN’s fintech unit at $5.2 billion, reflecting a significant growth opportunity while MTN aims to enhance its operational efficiency through network-sharing initiatives. Furthermore, the company exhibited resilience following substantial financial losses by promising an increased dividend for the upcoming year.
Original Source: nairametrics.com
