MTN Nigeria has successfully completed the acquisition of a 7.17% minority interest in MoMo Payment Service Bank (MoMo PSB) previously held by Acxani Capital, with a total investment of ₦6.95 billion, equivalent to approximately $4.36 million. This strategic move is aimed at streamlining and fortifying the operations of the fintech entity.
As a result of this transaction, MoMo PSB has transitioned to become a fully owned subsidiary of MTN Nigeria. Prior to the acquisition, MTN Nigeria’s ownership in MoMo PSB stood at 80%, with Acxani Capital holding the remaining 20% share. In May 2024, Acxani Capital expressed its intention to sell off its entire 20% stake, which was subsequently reduced to 7.17%.
The agreed purchase price between MTN Nigeria and Acxani Capital for the 7.17% stake was set at ₦6.95 billion. This acquisition has led to a reduction in MTN Nigeria’s “Other Reserves” by ₦12.97 billion.
The comprehensive cost incurred by MTN Nigeria for this acquisition amounted to ₦16.35 billion. This figure includes the ₦6.95 billion paid directly to Acxani Capital for the stake and an additional investment of ₦9.4 billion in MoMo PSB. The deal also encompassed the acquisition of assets from Acxani Capital, which were valued at ₦3.38 billion.
MoMo PSB, which was granted its operational license by the Central Bank of Nigeria (CBN) in 2022, has shown promising growth in its financial performance. For the half-year period concluding on June 30, 2024, the fintech reported a revenue of ₦48.6 billion. This represents an 11% increase compared to the revenue of ₦43.6 billion recorded during the corresponding period in the previous year, 2023.
The notable growth of MoMo Payment Service Bank (MoMo PSB) during the first half of 2024 can be attributed primarily to the success of its airtime lending product, Xtratime, and the increased adoption of its mobile money services.
The fintech experienced a significant surge in the number of active MoMo PSB wallets, which increased by 73.9%, reaching a total of 5.5 million by the end of the second quarter of 2024. This marked an addition of 701,000 wallets from the count at the end of the first quarter.
Additionally, the network of MoMo PSB agents expanded considerably, with an increase of approximately 498,000 agents, bringing the total to 239,000. This expansion contributed to a 33.4% year-on-year increase in the volume of transactions processed by the service.
Despite these positive trends, there was a substantial decrease in the cash held on behalf of MoMo PSB customers, which plummeted by 72%, falling to ₦2.15 billion from the previous ₦7.6 billion recorded at the end of 2023. Furthermore, by the end of the first half of 2024, MoMo PSB reported a liability of approximately ₦26.6 billion to its parent company, MTN Nigeria. During the same period, MoMo PSB made payments totaling ₦11.2 billion to MTN Nigeria.
In other related developments, February 2024 saw Mastercard making a significant investment in the MTN Group’s fintech division. Mastercard invested $200 million, which is equivalent to ₦3.8 billion, thereby acquiring a 3.8% minority stake in the company. This investment by Mastercard underscores the growing interest and confidence in the potential of MTN’s fintech operations.
The investment of $200 million (₦3.8 billion) by Mastercard into MTN Group’s fintech arm was a follow-through on an earlier announcement made six months prior, where Mastercard had expressed its intention to acquire a minority stake in MTN’s mobile money service, MTN MoMo. This move by Mastercard was a strategic investment, signaling its commitment to the growing mobile money market and its confidence in MTN MoMo’s potential and performance.
Mastercard’s decision to invest in MTN MoMo aligns with its broader strategy to expand its footprint in the digital payments space, particularly in emerging markets where mobile money services are rapidly gaining traction. By acquiring a 3.8% minority stake, Mastercard not only supports the expansion of MTN MoMo but also positions itself to benefit from the fintech’s continued growth and innovation in the mobile financial services sector.
