Mastercard seeks minority stake in MTN’s fintech unit

MTN, the largest wireless carrier in Africa, has announced that Mastercard has agreed to acquire a minority stake in its financial-technology (fintech) business, which MTN has valued at $5.2 billion.

The specific financial details of the deal have not been disclosed by MTN.

MTN’s CEO, Ralph Mupita, stated in a press release on Monday that the final investment agreements are expected to be signed in the very near future. During a media call on the same day, Mupita assured that they would share the terms of the deal transparently once the long-form agreement is finalised.

Across Africa, the younger and tech-savvy population is increasingly utilising mobile phones to bridge gaps in services, including banking. This trend has created a lucrative and rapidly growing space in the fintech sector for wireless carriers like MTN.

While a significant focus has been on mobile payment systems, there’s a wave of startups, such as Flutterwave and Interswitch, that have emerged in the fintech industry and are experiencing rapid growth.

Other major wireless carriers in Africa, such as Airtel Africa, Safaricom based in Nairobi, and South Africa’s Vodacom Group, are also in various stages of transitioning from basic voice and text mobile services to digital platforms. Their goal is to separate and monetise their businesses in the long term.

Airtel Africa has previously brought in Mastercard as an investor in its mobile-money unit. In 2020, India’s Jio Platforms, the digital arm of Reliance Industries owned by billionaire Mukesh Ambani, set a precedent by attracting investments from Facebook and Silver Lake Partners.

MTN had previously stated its intention to raise 25 billion rand ($1.3 billion) from asset sales. The company’s recent divestitures include the sale and lease-back of its South African mobile-phone towers, as well as plans to sell some of its West African assets.

Additionally, MTN holds a stake in the New York-listed tower owner IHS Holding, which it may consider selling down. However, potential challenges such as low trading prices for IHS Holding and a dispute with the management have postponed any near-term sale.