MTN Group Ltd. is reorganizing its financial technology operations in Nigeria, Ghana, and Uganda to facilitate Mastercard’s purchase of a minority stake. The spin-off is vital to completing a 2023 agreement with Mastercard, with a potential valuation of $5.2 billion. The company also aims to pursue network-sharing deals and announced a dividend plan that exceeds analyst expectations.
MTN Group Ltd. intends to spin off its financial technology operations in Nigeria, Ghana, and Uganda during the first half of the year. This restructuring aims to facilitate Mastercard Inc.’s acquisition of a minority interest in MTN’s rapidly growing fintech units. Chief Executive Officer Ralph Mupita confirmed to Bloomberg that this separation is necessary to finalize the agreement reached in 2023 with Mastercard.
The rising trend of mobile phone usage among Africa’s youthful, tech-savvy population has led to significant engagement within the fintech sector, as consumers seek to improve access to financial services. This has propelled MTN’s mobile-money transactions to exceed $320 billion, reflecting a 35% increase in constant currency terms.
Mastercard’s potential stake in MTN’s fintech operations could reach $200 million, which would place the unit’s estimated value at $5.2 billion. CEO Mupita noted that while progress is more advanced in Uganda and Ghana, the situation in Nigeria involves more complexities due to regulatory hurdles.
In addition, MTN is considering network sharing agreements in line with trends observed in European markets. MTN Group, Africa’s largest telecommunications provider by sales, announced a dividend of 3.45 rand (0.19 cents) per share for 2024, surpassing analysts’ expectations of 3.35 rand. Plans for a higher dividend of at least 3.70 rand per share for the current fiscal year have also been disclosed.
MTN Group’s strategic move to spin off its fintech operations in Nigeria, Ghana, and Uganda aims to secure a partnership with Mastercard. This initiative taps into the growing mobile financial services sector driven by Africa’s young population. The projected financial engagement with Mastercard is significant, with a valuation of $5.2 billion for the fintech unit. MTN’s outlook for dividends remains positive, reflecting confidence in its financial health and strategic direction.
Original Source: businessday.ng
