MTN open to selling up to 30% fintech stake

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 15 Aug 2023
MTN Group president and CEO Ralph Mupita.
MTN Group president and CEO Ralph Mupita.

MTN Group is on the lookout for additional potential investors interested in acquiring a minority stake in its fintech business.

This is according to MTN Group CEO Ralph Mupita, speaking at an investor conference call yesterday afternoon, following the release of the firm’s interim financial results for the six-month period that ended in June.

The group announced yesterday that Mastercard will acquire a minority stake in MTN’s fintech division, based on a cash and debt-free enterprise valuation of approximately $5.2 billion (R99 billion).

MTN says it reached an agreement with Mastercard, for an undisclosed minority investment to support the acceleration of its payments and remittances verticals.

The transaction comes as MTN Group is expanding its fintech business, putting the telecoms company on a solid footing, as it prepares to separate its financial services division.

Responding to media questions, Mupita said the group would be willing to consider selling up to 30% of its fintech stake, provided the investors put a valuable offer on the table.

“We are willing to go [sell] up to a maximum of 30% stake, but obviously only if it makes sense, and if the partners can bring something to the table that we feel is of value creation.

“This could either be through value capabilities, like with the Mastercard partnership, or if they are very skilled in supporting the growth and acceleration of other businesses similarly to this [Mastercard] partnership.

“MTN has 16 mobile money businesses under the group fintech business and the new partners would come in as potentially the first of several minorities within the group at fintech level,” he noted.

MTN’s fintech structure includes mobile money platform MoMo, insurance offerings, airtime lending and e-commerce, as well as its network services.

Over the past six months, MTN’s fintech business has been flourishing, with revenue growing by 21.7% year-over-year, primarily due to growth in the wallet (+20.7%), payment and e-commerce (+54.9%) and remittance (+78.9%) industries.

Discussing the prospects of listing the fintech business, Mupita said the group will only go that route at the right time. “We want to build the business at a robust and future-fit model, and we are not in a rush. We want to take our time to ensure advance services of a critical mass within our financial profile.”

Providing clarity on recent reports of rumoured fresh merger discussions between the group and Telkom, Mupita added there are no new discussions taking place between the two telcos.

Telkom is looking to sell off part of its assets amid a difficult operating environment and evolving technological advancements.

When asked to share his views about the Competition Commission’s recommendation to prohibit Vodacom’s bid to merge with fibre firm Maziv, Mupita commented that the news came as a “surprise”, because consolidation in the telco industry is inevitable.

Maziv is a newly-created company that owns fibre network operators Vumatel and Dark Fibre Africa.

“We see globally and in other markets, such partnerships providing access to technology and needed services in the home or on the go. Our position on consolidation remains intact, and it has been reinforced by what we see happening in markets such as the UK, Spain and other jurisdictions.

“The market structure for fixed-mobile convergence profit pools that companies are able to generate does not support having four or more players in the telecoms market anymore – anywhere in the globe. And it's only a matter of time before we accept this in South Africa and across the continent,” he concluded.