MTN Group will spin off its fintech units in Nigeria, Ghana, and Uganda by mid-2025 to facilitate Mastercard’s minority investment. The spin-off is progressing in Ghana and Uganda, while Nigeria faces regulatory complexity. Despite a loss reported for 2024, MTN plans to increase dividends, showcasing confidence in future growth.
MTN Group has outlined plans to separate its fintech operations in Nigeria, Ghana, and Uganda by the first half of 2025. This restructuring will facilitate Mastercard Inc.’s acquisition of a minority stake in these rapidly growing financial technology segments. MTN CEO Ralph Mupita confirmed this during a Bloomberg interview, emphasizing the necessity to complete this separation to fulfill a deal established with Mastercard in 2023.
The spin-off processes are progressing more smoothly in Uganda and Ghana, although there are greater regulatory hurdles in Nigeria. Mupita acknowledged that Nigeria has “a bit more complexity with some more regulatory processes to work through.” Despite these challenges, MTN is dedicated to completing the reorganization in all three countries.
In addition to its fintech expansion, MTN is also investigating network-sharing agreements, which are gaining popularity in European markets. This strategy aims to optimize infrastructure costs and enhance service delivery for the company.
The agreement with Mastercard places a valuation of $5.2 billion on MTN’s fintech unit, with Mastercard expected to invest up to $200 million. In conjunction with this acquisition, MTN mentioned, “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.”
Moreover, MTN noted a memorandum of understanding evidencing Mastercard’s minority investment into Group Fintech based on an enterprise valuation of approximately $5.2 billion. The signing of definitive investment agreements is anticipated soon, pending customary due diligence and the satisfaction of closing conditions.
MTN, recognized as Africa’s leading telecommunications provider by sales, recently reported a full-year loss of 9.59 billion rand for 2024, which was worse than the forecasted loss of 3.87 billion rand. Furthermore, the company declared a dividend of 3.45 rand per share for 2024, with intentions to raise this to at least 3.70 rand per share for the upcoming financial year, indicating optimism regarding its financial performance and future growth prospects.
MTN Group is undertaking a significant restructuring of its fintech operations in Nigeria, Ghana, and Uganda to allow Mastercard to acquire a stake in these ventures. Despite regulatory challenges, especially in Nigeria, MTN is committed to the spin-off process. Alongside this move, MTN is exploring cooperative network agreements and aims for more substantial financial returns, bolstered by its agreement with Mastercard and improved dividend policies.
Original Source: nairametrics.com
