Mastercard to acquire minority stake in MTN’s $5.2bn fintech business

MTN, the South Africa-based telecommunications big, has introduced that multinational fee processing agency Mastercard will purchase a minority stake in its fintech division.

“Mastercard has executed an MoU to make a minority funding in MTN Group Fintech,” the corporate said in its H1 2023 Group Outcomes presentation.

“The finalisation of agreements is anticipated within the close to time period, pending the standard closing situations, upon the conclusion of customary due diligence,” it says.

MTN Group Fintech encompasses its cellular service, MTN Cell Cash (MoMo), which boasts almost 70m customers throughout 17 African nations.

Mastercard’s funding is a part of MTN’s broader technique to promote as much as 30% in its fintech enterprise to outdoors traders.

“MTN Group will proceed exploring alternatives for value-enhancing partnerships and investments, contingent upon market situations, with strategic companions and long-term traders for as much as 30% of MTN Group Fintech,” the corporate added.

Underneath the partnership with Mastercard, MoMo customers will be capable to generate digital Mastercard fee playing cards linked to their MoMo wallets. It’ll additionally allow Group Fintech retailers to just accept Mastercard funds. The South African telco additionally mentioned it goals to capitalise on Mastercard’s intensive community and consumer base to increase its fintech providers.

MoMO transactions enhance in 2023

MTN says that the Mastercard funding will probably be grounded in a $5.2bn valuation of its fintech enterprise.

Throughout H1 2023, MTN Group’s fintech income reached roughly $520m, marking a 21.7% surge from the corresponding interval the earlier yr.

MTN’s MoMo service processed 8.3bn transactions valued at $135.2bn within the first six months of 2023. Month-to-month energetic customers held at 61m between H1 2022 and H1 2023.

MTN attributes the restricted development in energetic customers to the money shortage skilled in Nigeria initially of the yr, in addition to a person base cleanup in Côte d’Ivoire. Nonetheless, the agency stays optimistic about its long-term prospects, concentrating on 100m month-to-month energetic customers, 2m brokers, and 3m retailers by 2025.

However the corporate identifies a number of key challenges affecting its short-term outlook, together with geopolitical components, inflation, and alternate fee fluctuations for the Nigerian naira and the South African rand towards the US greenback.

MTN anticipates substantial demand in two segments: knowledge and fintech (via the enlargement of its cellular cash service, MoMo). Fintech transaction quantity has surged 3.2 occasions because the conclusion of the lockdown interval in 2021.