Mastercard To Acquire A Minority Stake In MTN Group’s $5.2 Billion Fintech

Mastercard has said that it will acquire a minority stake in the fintech operations of MTN Group, which is the largest cell phone provider in Africa. The signing of an agreement deal between the two will happen soon as the two parties near the end of the due diligence process.

Mastercard to buy a stake in MTN’s fintech business

MTN revealed the planned business deal in the half-year financial results of the company. The Group President and CEO of MTN, Ralph Mupita, noted that the agreement will be a commercial partnership on payments and remittances. It will also use the technical infrastructure offered by Mastercard to develop across Africa.

A report by Bloomberg noted that the share size of the deal would be confirmed once the transaction is complete. MTN started looking for new investors in its fintech business in 2022 after it branched away from its core telecom operations.

The company, whose home market is Johannesburg, secured a boost in its fintech operations after getting a mobile banking license in Nigeria, currently its largest market. This license allowed MTN to provide financial services to millions of new clients in a new market.

MTN posts positive results in the first half of 2023

Besides announcing the planned deal to acquire a stake in MTN’s fintech business, MTN also posted positive financial results. Mupita noted that the company had reported a resilient performance in the first six months of 2023 and made significant progress against the challenging macro environment.

The executive noted that South Africa was one of the markets that had performed well in the first half of 2023. According to Mupita, the company was encouraged by the positive network availability and power-resilient investment, resulting in improved performance in Q2 2023 compared to Q1 2023.

“In Nigeria, we delivered a very strong operational result, having navigated the cash shortages in Q1 2023 and increased inflation. The policy changes implemented in Nigeria in Q2 ’23 have short-term negative impacts, but we see these as being very constructive for the investment climate in the medium to longer term,” Mupita said.

During the first half of 2023, the transactions reported by the MTN mobile money business increased by 37% to $8.3 billion. More than 60 million active users did these transactions. At the end of June this year, MTN had more than 290 million subscribers, pointing toward significant growth in operations.

It is not the first time Mastercard has secured a deal with a mobile operator in Africa. In 2021, Mastercard secured a deal with Airtel Africa, with the India-founded telecom getting $00 million for its mobile money division known as Airtel Mobile Commerce BV. The deal was made at a $2.65 billion valuation.

The Bloomberg report noted that Mastercard will purchase its stake in MTN mobile money at a $5.2 billion valuation. The amount might strengthen MTN’s balance sheet by imposing a temporary substitute on subsidiary dividends and offsetting an increase in the 2023 capital-spending projections.