MTN Group to sell minority stake of its fintech business to Mastercard

MTN Group CEO Ralph Mupita announced that the company has agreed to sell a minority stake of its $5.2 billion Fintech business to Mastercard to support the acceleration and growth of its fintech business’s payments and remittance services. The announcement sent MTN shares 7 per cent higher by lunchtime on the Johannesburg stock market on Monday.

According to the telecoms CEO in a video call with Bloomberg, the deal will be structured in two parts, including a commercial agreement on payments and remittance that uses Mastercard’s technology infrastructure to expand in Africa and the investment into a minority stake. He also stated that the size of the stake will be disclosed when the deal closes.

This development follows Mastercard’s $100 million investment in Airtel Mobile Commerce BV, the holding company for Airtel Africa’s mobile money operations in 2021.

This sale is a culmination of a partnership that started as far back as 2021 when both parties entered into a strategic partnership to enable millions of consumers in 16 countries across Africa to make global e-commerce payments safely and securely. Through a Mastercard virtual payment solution linked to MTN MoMo (Mobile Money) wallets, consumers and merchants were able to engage with brands and businesses abroad through digital commerce, extending their reach to an international marketplace and unlocking a host of opportunities.

MTN’s fintech unit includes the mobile money business whose volume of transactions increased by 37% to 8.3 billion in the first half of 2023. These were executed by 61 million active MoMo customers, which was largely impacted by the effects of the cash shortages in Q1 and the company’s strategic shift to focus on wallet customers in Nigeria; as well as a clean-up of the user base in Côte d’Ivoire

Notwithstanding, half year fintech service revenue grew by 21.7%*, with an accelerating trajectory in Q2 2023 (up 25.4%*), reflecting the positive momentum in our overall ecosystem.

Group Revenue for the interim period ending June 2023 grew to R113.2 billion (2022: R97.5 billion) while profit after tax attributable to equity holders of the company increased to R9.2 billion (2023: R8 billion). Furthermore, headline earnings per share went up to 542 cents per share (2022: 506 cents per share).