In a strategic move aligned with its long-term financial goals, MTN Group has forged an agreement to divest a portion of its fintech business to global financial giant Mastercard. The South African-based telecom operator seeks to generate funds through asset sales and the expansion of its financial services platform.
MTN Sells Minority Stake to Mastercard
In announcing its H1 earnings outcomes, MTN unveiled a significant step by entering into a Memorandum of Understanding (MoU) with Mastercard. The intention behind this MoU is for Mastercard to undertake a minority investment in MTN’s fintech venture, valuing the business at approximately $5.2 billion.
This valuation is in accordance with MTN’s prior objective of positioning the unit within a valuation bracket ranging from $5 billion to $6 billion. Ralph Mupita, MTN’s CEO, emphasized that the selection of Mastercard followed a meticulous process to identify potential minority investors. He expressed anticipation of finalizing a concrete agreement soon, pending customary due diligence procedures.
Beyond this collaboration, Mastercard’s financial involvement extends to another major telecom player, Airtel Africa. Mastercard invested $100 million into Airtel Africa’s mobile money division, further highlighting its strategic focus on the mobile finance sector.
For MTN, this sale stands as a strategic move in line with its Ambition 2025 initiative, introduced two years ago. This initiative outlined a strategic shift that involves segregating infrastructure assets and platforms, including fintech, to create opportunities for external investments, partnerships, and capital infusion.
H1 financial performance records underscore MTN’s positive trajectory. With service revenue surging to ZAR107.7 billion ($5.7 billion), a remarkable 16.5% surge year-on-year, the company’s data segment and fintech endeavors significantly contributed to this growth.
Nigeria emerged as a star performer, boasting a 24% rise in service revenue to ZAR43.6 billion. In contrast, South Africa registered more moderate growth, with a 1.9% uptick to ZAR20.4 billion.
The operator’s subscriber base experienced a steady increase of 3.6%, reaching a total of 291.7 million. Notably, the mobile money customer count maintained its position at 60.5 million. Impressively, mobile money transactions surged by an impressive 61.6%, reaching a total of $135.2 billion.
However, the company withheld comprehensive details pertaining to group-wide revenue, net income, and quarterly statistics.
In essence, MTN Group’s strategic collaboration with Mastercard in divesting a stake in its fintech business reflects its commitment to maximizing value through partnerships and capital infusion. The telecommunications giant’s H1 performance, which was characterized by impressive revenue growth and a steadfast subscriber base, highlights its continued relevance and strategic foresight within the constantly changing telecom landscape.