MTN’s FinTech Business Now Worth $5.2bn After Mastercard Deal

MTN’s FinTech Business Now Worth $5.2bn After Mastercard Deal

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MTN Group will sell a minority stake in its financial-technology business to Mastercard Inc, the telecommunications company revealed on Monday.

During an investor call, the Chief Executive Officer of MTN Group, Ralph Mupita, said the acquisition by Mastercard will increase the value of its fintech business to $5.2 billion. 

Mupita disclosed that the maximum stake could be 30 per cent, stating further that the transaction will allow MTN to utilise Mastercard’s technology infrastructure. 

The technology infrastructure will expand the telecommunications company’s payments and remittance services in Nigeria and Africa. 

“Following the bespoke process to identify and potentially introduce strategic minority investors into MTN Group Fintech, we executed commercial agreements with Mastercard to support the acceleration and growth of our fintech business’s payments and remittance services.  

“MTN and Mastercard also signed a memorandum of understanding which provides for a minority investment by Mastercard into Group Fintech based on a total enterprise valuation of about US$5.2 billion for the business on a cash and debt-free basis. 

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“The signing of the definitive investment agreements is expected to occur in the very near term as we approach the finalization of customary due diligence,” MTN Nigeria said, adding, “The closing of the investment will be subject to customary closing conditions.” 

Note that in April 2021, Mastercard also acquired a minority interest in the mobile money division of Airtel Africa, Airtel Mobile Commerce BV (AMC BV), a market rival of MTN Group. 

The transaction between Mastercard and Airtel Africa was valued at about $100 million, raising the value of the mobile money business to around $2.65 billion.

At the time of announcing the deal, Airtel said the acquisition will improve card issuance, payment gateway, payment processing, merchant acceptance and remittance solutions, amongst others. 

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Also, in March 2021, Airtel Africa sold minority shares of its mobile money, worth $200 million, to The Rise Fund, as the network provider used its assets to raise capital. 

Both MTN and Airtel have been expanding beyond their core business following the growing interest in the payment and mobile money market in Nigeria. 

In the second quarter (Q2) of 2023, Financial Technology (FinTech) companies raised a combined $189 million with 59 deals sealed. Nigeria’s FinTech startups accounted for 25 deals or 42.3 per cent of the total deals.

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