MTN to seek investors for fintech unit to fund booming division

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Image: Waldo Swiegers/Bloomberg

MTN Group will look for minority investors in its African fintech unit after separating the division from the carrier’s traditional telecom business, a move to maximise growth in the booming division.

The continent’s largest mobile-phone operator is on track to complete the carve-out by the end of June, according to a statement on Wednesday. A similar move for the fibre-network division is at an earlier stage and will be finalised next year.

Read: Data and fintech drive MTN’s 24% growth in earnings

“We will be working on bringing strategic equity partners into the fintech business during the second part of the year — that can help us accelerate the growth of this business,” chief executive officer Ralph Mupita told reporters after announcing an increase in full-year earnings.

The Johannesburg-based company’s plans will likely get a boost from the anticipated formal approval of a mobile-banking license in Nigeria, its biggest market, which will enable MTN to offer financial services to millions of new customers. The group’s mobile-money transactions soared 57% last year to $24 billion.

Airtel, Jio

MTN shares rose 3.4% as of 9:40 a.m. in Johannesburg, extending a breakneck run that recently saw the stock hit seven-year highs. The company resumed dividend payments, and said payouts will increase to R3.3 a share this year from R3 in 2021.

MTN share price

Telecommunication operators on Africa are working overtime to fast-track fintech operations in a continent that’s belatedly making a rapid transition to digitalisation from basic voice and text mobile use. Mobile-payment systems have been a particular hotspot, triggering a wave of fast-growing startups including Flutterwave in countries such as Nigeria, Africa’s most populous nation with about 200 million people.

MTN rivals including Airtel Africa Plc, Nairobi-based Safaricom and South Africa’s Vodacom Group are all at various stages of the this transformation, with a broad aim to separate and monetise the businesses in the longer term.

Airtel last year brought in Mastercard as an investor in its mobile-money unit. India’s Jio Platforms, the digital arm of billionaire Mukesh Ambani’s Reliance Industries Ltd., set an earlier precedent by attracting capital from Facebook and Silver Lake Partners in 2020.

Helios Investment Partners, an Africa-focused private-equity firm, said in an interview in January it’s in talks with telecom operators on the continent and banks about mobile-money and digital-payments deals.

© 2022 Bloomberg

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