MTN Group plans to spin off its fintech operations in Nigeria, Ghana, and Uganda in 2025, allowing Mastercard to acquire a minority stake valued at $5.2 billion. Regulatory challenges persist primarily in Nigeria. MTN also aims to enhance service delivery through network-sharing agreements and has declared a dividend payout for 2024 while maintaining confidence in its future growth.
MTN Group has announced its intention to separate its financial technology operations in Nigeria, Ghana, and Uganda by the first half of 2025. This strategic move is designed to facilitate Mastercard Inc.’s acquisition of a minority stake in these rapidly growing fintech units. MTN CEO Ralph Mupita made this announcement during an interview with Bloomberg.
As part of the arrangement with Mastercard, MTN is mandated to divest its fintech businesses in the aforementioned markets. The spin-off is progressing more smoothly in Ghana and Uganda; however, Nigeria presents certain regulatory challenges. Mupita commented that Nigeria has “a bit more complexity with some more regulatory processes to work through.”
Despite the complexities in Nigeria, MTN is committed to executing the reorganization in all three markets. Alongside its fintech activities, the group is also pursuing network-sharing agreements, reflecting a growing trend in European markets. This approach aims to enhance infrastructure efficiency and service delivery within the company.
The partnership with Mastercard values MTN’s fintech division at $5.2 billion, with Mastercard set to invest up to $200 million. MTN revealed that this acquisition deal, established in 2023, was accompanied by a commercial agreement with Mastercard intended to boost the growth of their fintech operations, particularly in payments and remittances.
During the 2023 announcement, MTN confirmed the signing of a memorandum of understanding that facilitates Mastercard’s minority investment, based on an average valuation of $5.2 billion for the business. The definitive investment agreements are expected to be concluded soon, contingent on standard due diligence procedures and customary closing conditions.
MTN, being the largest telecommunications provider in Africa by sales, recently reported financial results that reflect a loss of 9.59 billion rand for the year ending December 31, 2024. This figure was significantly worse than the anticipated loss of 3.87 billion rand. MTN also declared a dividend of 3.45 rand per share for 2024 and affirmed plans to raise its dividend payout to a minimum of 3.70 rand per share, exhibiting confidence in its financial robustness and future growth.
In conclusion, MTN Group is poised to spin off its fintech operations in Nigeria, Ghana, and Uganda, facilitating a strategic minority stake acquisition by Mastercard. While facing regulatory hurdles in Nigeria, MTN remains dedicated to this reorganization. The partnership values MTN’s fintech unit significantly and reflects the company’s optimism about its financial future and growth prospects following a disappointing fiscal year in 2024.
Original Source: nairametrics.com
