MTN has agreed to sell a minority stake in its fintech division to global payments giant Mastercard in a deal that could be worth a substantial sum.
“Mastercard has executed an MoU to make a minority investment in MTN Group Fintech,” the company stated in its H1 2023 Group Results presentation.
“The finalisation of agreements is expected in the near term, pending the usual closing conditions, upon the conclusion of customary due diligence,” it says.
MTN Group Fintech encompasses its mobile service, MTN Mobile Money (MoMo), which boasts nearly 70m users across 17 African countries.
Mastercard’s investment is part of MTN’s broader strategy to sell up to 30% in its fintech business to outside investors.
“MTN Group will continue exploring opportunities for value-enhancing partnerships and investments, contingent upon market conditions, with strategic partners and long-term investors for up to 30% of MTN Group Fintech,” the company added.
Under the partnership with Mastercard, MoMo users will be able to generate virtual Mastercard payment cards linked to their MoMo wallets. It will also enable Group Fintech merchants to accept Mastercard payments. The South African telco also said it aims to capitalise on Mastercard’s extensive network and client base to expand its fintech services.
MTN says that the Mastercard investment will be grounded in a $5.2bn valuation of its fintech business.
During H1 2023, MTN Group’s fintech revenue reached approximately $520m, marking a 21.7% surge from the corresponding period the previous year.
MTN’s MoMo service processed 8.3bn transactions valued at $135.2bn in the first six months of 2023. Monthly active users held at 61m between H1 2022 and H1 2023.
MTN attributes the limited growth in active users to the cash scarcity experienced in Nigeria at the beginning of the year, as well as a user base cleanup in Côte d’Ivoire. Nevertheless, the firm remains optimistic about its long-term prospects, targeting 100m monthly active users, 2m agents, and 3m merchants by 2025.
But the company identifies several key challenges affecting its short-term outlook, including geopolitical factors, inflation, and exchange rate fluctuations for the Nigerian naira and the South African rand against the US dollar.
MTN anticipates substantial demand in two segments: data and fintech (through the expansion of its mobile money service, MoMo). Fintech transaction volume has surged 3.2 times since the conclusion of the lockdown period in 2021.