MTN Group plans to spin off its fintech units in Nigeria, Ghana, and Uganda by mid-2025 to facilitate Mastercard’s minority stake acquisition. This strategic move aims to reorganize their operations amidst regulatory challenges, particularly in Nigeria. MTN also announced a loss for 2024 but plans to increase dividends, signaling confidence in future growth.
MTN Group has announced its intention to spin off fintech operations in Nigeria, Ghana, and Uganda within the first half of 2025. This strategic reorganization aims to facilitate Mastercard Inc.’s acquisition of a minority share in these rapidly growing units, as disclosed by MTN CEO Ralph Mupita during a recent interview with Bloomberg. The separation of these fintech businesses is a prerequisite for finalizing a deal established with Mastercard in 2023.
The spin-off processes are reportedly more advanced in Uganda and Ghana. However, Nigeria presents additional regulatory challenges that require careful navigation, as Mupita stated that it has “a bit more complexity with some more regulatory processes to work through.” Despite these hurdles, MTN is committed to achieving the reorganization in all three markets.
In addition to the fintech developments, MTN is considering network-sharing agreements, aligning its strategy with established trends in European telecom markets. This approach aims to reduce infrastructure costs and enhance service delivery. The collaboration with Mastercard values MTN’s fintech unit at $5.2 billion, with the payments giant poised to acquire a stake worth up to $200 million.
Upon announcing the partnership with Mastercard, MTN highlighted its efforts to pursue strategic minority investors, as evidenced in the commercial agreements signed to bolster its fintech business’s payments and remittance services. The memorandum of understanding stipulates a minority investment by Mastercard based on a total enterprise valuation of around $5.2 billion, excluding cash and debt. The formal investment agreements are expected to finalize shortly, contingent on customary due diligence and closing conditions.
Furthermore, MTN released its financial results for the full year ending December 31, 2024, reporting a loss of 9.59 billion rand, which surpassed the anticipated loss of 3.87 billion rand. Despite this setback, the company announced a dividend of 3.45 rand per share for 2024 and plans to increase the dividend payout to at least 3.70 rand per share for the current financial year, indicating a degree of confidence in its future financial performance and growth potential.
MTN Group is poised to enhance its fintech operations through a strategic spin-off in Nigeria, Ghana, and Uganda, enabling Mastercard to acquire a minority stake. Despite regulatory complexities in Nigeria, the company remains committed to this reorganization and is also exploring network-sharing strategies to optimize costs. MTN’s partnership with Mastercard represents a significant valuation of its fintech unit, underscoring its growth prospects amidst current financial challenges, as reflected in its recent fiscal results.
Original Source: nairametrics.com
