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MTN values mobile-money arm at R75bn, considers IPO

Mobile money is one of the fastest-growing sources of income for wireless-network companies operating in sub-Saharan Africa.
A vendor holds mobile phones and airtime scratch cards at a Mobile Money stall operated by MTN Group on a street in Kigali, Rwanda. Image: Will Boase/Bloomberg

MTN Group values its mobile-money arm at about $5 billion and will consider a listing of the division, joining African wireless carriers trying to monetise a service that is particularly popular on the continent.

The move comes after Mastercard and TPG Holdings invested $300 million in Airtel Africa’s mobile-money business at a $2.65 billion value.

“With similar valuations to that of Airtel, our valuation would sit at R75 billion, or about $5 billion,” said MTN chief executive officer Ralph Mupita. “No decision has been made as yet, but listing will be an option considered if that will be the best approach to unlock value.”

Johannesburg-listed MTN has previously said it was looking to spin off its entire fintech business, which includes mobile money. That has been valued by Nedbank Group at R87 billion, according to a March 26 note, adding the process could take as much as a year.

MTN shares traded 1.7% higher at the close in South Africa’s commercial capital, and have gained 48% in the year to date.

Mobile money, where users store and manage cash in an account linked to a mobile phone, is one of the fastest-growing sources of income for wireless-network companies operating in sub-Saharan Africa, such as MTN and Vodafone Group-controlled Vodacom Group and Safaricom.

The region, which struggles with limited banking infrastructure, has more mobile-money accounts than anywhere else in the world, with about 548 million at the end of 2020, or 54% of all customers, according to the GSMA, the global industry group.

Safaricom, based in Nairobi, is the largest mobile-money provider in the region through its M-Pesa service. Potential exists for further growth, with the two most-populous countries, Nigeria and Ethiopia, yet to roll out of the service.

MTN’s valuation was reported earlier by the Financial Times.

© 2021 Bloomberg

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