Mastercard, a global leader in financial technology (fintech), is preparing to acquire a minority stake in the fintech division of MTN Group, the largest cell phone provider in Africa. The valuation of this stake is placed at $5.2 billion. The final investment agreements are expected to be signed soon, as both parties are nearing the end of their due diligence process. MTN’s statement on its half-year financial performance, released on Monday, revealed that the investment will be concluded subject to standard closing conditions.
According to Ralph Mupita, the President and CEO of MTN Group, the deal will be structured as a commercial partnership focusing on payment solutions and remittances. Mastercard’s technical infrastructure will be leveraged to foster growth across Africa. This collaboration will also involve Mastercard making an investment in a minority share. The specific size of the share will be disclosed after the transaction’s completion.
Mupita stated, “We achieved a resilient performance in H1 2023 and made strategic advancements despite challenging macroeconomic conditions. In South Africa, our increased investment in power resilience led to improved network availability, resulting in a stronger performance in Q2 2023 compared to Q1 2023. In Nigeria, we navigated cash shortages and higher inflation, delivering strong operational results. While policy changes in Nigeria during Q2 2023 had short-term negative effects, we view them as positive for the investment climate in the medium to long term.”
This development comes a year after MTN Group’s announcement of seeking minority investors for its African fintech subsidiary. This separation from the main telecom business aimed to boost growth in this thriving sector. The acquisition of a mobile banking license in Nigeria, MTN’s largest market, provided impetus to the company’s ambitions, enabling it to offer financial services to a substantial new customer base.
For the first half of this year, MTN’s mobile money business witnessed a 37% increase in recorded transactions, totaling $8.3 billion, with over 60 million active users. As of June 2023, MTN Group’s subscriber base exceeded 290 million.
In summary, Mastercard’s investment in MTN’s fintech division underscores the dynamic growth potential of Africa’s fintech landscape, driven by the increasing demand for digital financial solutions across the continent.