MTN Group will spin off its fintech operations in Nigeria, Ghana, and Uganda by mid-2025, facilitating a minority stake acquisition by Mastercard. While Uganda and Ghana are progressing well, Nigeria experiences regulatory complexity. Despite reporting a loss for 2024, MTN plans to increase dividend payouts, indicating confidence in its financial prospects.
MTN Group, Africa’s leading telecommunications provider, plans to spin off its fintech operations in Nigeria, Ghana, and Uganda by the first half of 2025. This initiative is aimed at facilitating Mastercard Inc.’s acquisition of a minority stake in these rapidly growing business units. MTN CEO Ralph Mupita announced these developments during a recent interview with Bloomberg.
In 2023, MTN agreed to separate its fintech businesses as a condition for finalizing the deal with Mastercard. Although the spin-off processes in Uganda and Ghana are progressing well, Nigeria’s situation remains complex due to regulatory challenges. Mupita acknowledged the added complexities characterizing Nigeria’s regulatory landscape, yet affirmed the company’s commitment to completing the spin-off in all three markets.
In conjunction with its fintech plans, MTN is also pursuing network-sharing agreements, a strategy that mirrors trends seen in European markets. This approach is anticipated to enhance infrastructure efficiency and service delivery. MTN’s deal with Mastercard values its fintech unit at $5.2 billion, with Mastercard expected to invest up to $200 million.
MTN’s deal announcement includes significant strategic initiatives, such as commercial agreements to spur growth in payments and remittance services. A memorandum of understanding was signed to outline Mastercard’s minority investment into Group Fintech, predicated on a valuation of around $5.2 billion for the business.
For the financial year ending December 31, 2024, MTN reported a loss of 9.59 billion rand, slightly greater than the anticipated loss of 3.87 billion rand. Nevertheless, the company revealed plans to increase its dividend payout to at least 3.70 rand per share for the current financial year, reflecting a confidence in future growth and financial performance.
In summary, MTN Group’s decision to spin off its fintech units in Nigeria, Ghana, and Uganda is a strategic move designed to facilitate a minority investment by Mastercard. Despite regulatory challenges in Nigeria, MTN is determined to proceed with the spin-off, which aligns with broader plans for network sharing. The financial results indicate a short-term loss yet a positive outlook with increased dividend payouts, showcasing MTN’s dedication to future growth and sustainability.
Original Source: nairametrics.com
