MTN, Pan African Telecommunications Group, announced a memorandum of agreement with Mastercard to sell a $5.2 billion minority stake in its fintech business. This was announced in a statement on the company’s half-year financial performance posted on Monday.
According to the Group, the investment agreements will be signed as soon as due diligence is completed. MTN also revealed that its fintech division met its quick expansion targets in the first half of this year.
It also stated that the amount of transactions climbed by 37% to 8.3 billion, with 61 million active MoMo customers completing these transactions. MTN stated, while noting that the Group struck a commercial deal with Mastercard to accelerate the expansion of its fintech business:
“We executed commercial agreements with Mastercard to support the acceleration and growth of our fintech business’s payments and remittance services following the bespoke process to identify and potentially introduce strategic minority investors into MTN Group Fintech.”
MTN and Mastercard also signed a memorandum of agreement, which calls for Mastercard to make a minority investment in Group Fintech based on a total enterprise valuation of about US$5.2 billion for the business on a cash and debt-free basis.
The signing of the definitive investment agreements is likely to take place very soon, as we near the completion of normal due diligence. “The closing of the investment will be subject to customary closing conditions.”
MTN Group CEO, Ralph Mupita, provided views on the Group’s financial performance for the half year 2023, saying the Group had a robust performance and made significant strategic progress amid a challenging macro backdrop.
“We were very encouraged in South Africa by the improved network availability as a result of our power-resilience investment, resulting in a stronger Q2 23 performance than Q1 23,” he said.
“Despite severe electricity shortages across the country, MTN South Africa’s network availability was more than 90% by the end of June. “In Nigeria, we delivered a very strong operational result, navigating cash shortages and increased inflation in Q1 23,” Mupita added.
“We see the policy changes implemented in Nigeria in Q2 23 as being very constructive for the investment climate in the medium to long term,” Mupita added. The Group had 292 million subscribers at the end of June 2023.This 4% increase in subscriber base benefited from cheaper data rates and greater access to broadband services.
“A very strong operational result, having navigated the cash shortages and increased inflation in Q1 23,” Mupita remarked.
“We see the policy changes implemented in Nigeria in Q2 23 as being very constructive for the investment climate in the medium to long term,” Mupita added.
According to him, MTN Group’s service revenue increased 15% in constant currency terms to about R108 billion. This was driven by a 24% increase in income from data services and a 22% increase in revenue from fintech services. Voice service revenue climbed by 6% during the period.