The largest mobile phone operator in Africa, MTN Group, has agreed to sell Mastercard a minority investment in its fintech unit, which it values at $5.2 billion.
MTN Group CEO Ralph Mupita stated during an investor conference call that the company is looking for new potential investors interested in acquiring a minority position in its fintech sector.
The partnership with Mastercard aims to grow and give the group a stable foundation as it gets ready to spin off its financial services sector into a separate firm. Based on an enterprise evaluation worth roughly $5.2 billion that is free of cash and debt, Mastercard will buy a small minority stake in MTN's fintech subsidiary. The agreement will be set as both an investment in a minority share and a commercial collaboration on payments and remittances that will use Mastercard's technical infrastructure to expand throughout Africa.
"We are open to selling a maximum of 30% of the company, but certainly only if it makes sense and if the partners can contribute something that we believe would add value.
This might be accomplished either through value-added services, as with the Mastercard partnership, or if they have a great deal of experience fostering the expansion and acceleration of other firms, as with the [Mastercard] relationship”
The group fintech business of MTN includes 16 mobile money companies. Over 60 million active users executed the transactions that MTN's mobile money business recorded during the first half of this year, which climbed by 37% to $8.3 billion. Over 290 million people were subscribers of the MTN Group as of June 30, 2023.
Telcos in Fintech
Mastercard announced in April 2021 an investment of $100 million in Airtel Mobile Commerce BV (AMC BV), the mobile money division of telco Airtel Africa. At a $2.65 billion valuation, AMC BV runs one of the continent's biggest financial services, providing users with access to mobile wallets, support for international money transfers, loans, and virtual credit cards, making it one of MTN's greatest rivals.
Safaricom’s M Pesa, is another that has long dominated Kenya's mobile money industry. Along with Vodacom of South Africa, the telecom provider is seeking to separate its fintech division from its core telecom operations. Because the region is gradually moving away from traditional voice and text mobile services and towards digital services, there is an incentive for these telecommunications providers in Africa to promote fintech operations. Due to the financial services they provide, these telecom carriers will face competition from well-known African fintech firms including Interswitch, Flutterwave, Chipper Cash, and MFS Africa.