MasterCard is poised to acquire a minority stake in MTN Group’s fintech division, valuing it at approximately US$5.2 billion, in a significant step toward bolstering the telecom giant’s payment and remittance services. The two companies have entered a memorandum of understanding, with a definitive investment agreement anticipated in the near future, pending customary due diligence.
MTN Group, Africa’s leading telecom services provider, unveiled its interim financial results for the half-year ending in June. Notably, the company secured an agreement with MasterCard during this period for a minority investment, focused on accelerating its fintech offerings, including payments, remittances, and technology infrastructure.
Ralph Mupita, CEO of MTN Group, emphasized that the collaboration with MasterCard would play a pivotal role in boosting the growth and profitability of their fintech services. As a recognized global brand and a prominent international payment systems company, MasterCard’s involvement enables MTN’s Mobile Money (MoMo) users to engage in global payments while facilitating MoMo businesses’ digitization, extending beyond MoMo users and enabling broader participation in the global economy.
This strategic move aligns with MTN Group’s ongoing expansion in the fintech sector, positioning the telecom company for a stronger future as it prepares to separate its financial services division. Fintech revenue surged by 21.7% year-over-year in the past six months, with robust growth in wallet services, payment and e-commerce, and remittances.
Mupita noted the firm’s contentment with the sequential recovery and positive trajectory of fintech revenue, with growth surging to 25.4% in Q2 compared to 17.4% in Q1. A Public Switched Telecommunications License (PSB) obtained in Cameroon during the second quarter enhances MTN’s ability to expand its advanced product offerings.
Despite factors leading to a flat number of active MoMo users in the current reporting period, Mupita highlighted the ongoing strength of MTN’s overall fintech ecosystem. Transaction volumes rose by 37.3% to 8.3 billion transactions, accompanied by a remarkable 61.6% increase in transaction value, reaching US$135.2 billion.
MTN Group is progressing in structurally separating its fintech and GSM businesses, with plans to achieve a mid-30% EBITDA margin for Group Fintech once intercompany agreements are finalized. The low capex intensity of fintech operations underscores its attractive operating free cash flow (OpFCF) economics, with H1 OpFCF margins reaching approximately 37.0% on a consolidated basis.