MTN, Africa’s biggest wireless carrier, said Mastercard agreed to take a minority stake in its financial-technology business, which the company values at $5.2 billion.
In a call with media on Monday morning, Mupita said they would be transparent with the terms of the deal as soon as the long-form agreement is signed.
Africa’s young, tech-savvy population are increasingly using their mobile phones to bridge gaps in services including banking. That’s opened a lucrative and fast-growing space in the fintech sector for wireless carriers.
MTN rivals including Airtel Africa, Nairobi-based Safaricom, and South Africa’s Vodacom Group are all at various stages of transforming from basic voice and text mobile use to digitalization, with a broad aim of separating and monetizing the businesses in the longer term.
MTN has said previously it plans to raise 25 billion rand ($1.3 billion) from asset sales. Its most recent disposals include the sale and lease-back of its South African mobile-phone towers and a plan to sell some of its West African assets.
Key points :
Partnership with Mastercard: MTN, the largest wireless carrier in Africa, has announced that Mastercard will be taking a minority stake in its financial-technology business. The value of MTN's fintech business is estimated at $5.2 billion.
Deal Details: The specific financial details of the deal have not been revealed by MTN. However, the signing of the definitive investment agreements is expected to happen soon, according to MTN CEO Ralph Mupita.
Fintech Opportunity in Africa: The young and tech-savvy population in Africa is increasingly using mobile phones for various services, including banking. This has created a lucrative and fast-growing space for wireless carriers in the fintech sector.
Mobile Payments: The attention in the African fintech sector has been on mobile-payment systems, with startups like Flutterwave and Interswitch gaining traction.
Transformation of Rivals: Other wireless carriers like Airtel Africa, Safaricom, and Vodacom Group are also undergoing transformations to transition from basic voice and text mobile services to digitalization. They aim to monetize these digital services in the long run.
Precedents: Airtel Africa had previously brought in Mastercard as an investor in its mobile-money unit. The digital arm of India's Reliance Industries, Jio Platforms, set a precedent by attracting capital from Facebook and Silver Lake Partners in 2020.
Asset Sales: MTN has plans to raise 25 billion rand ($1.3 billion) from asset sales. This includes the sale and lease-back of its South African mobile-phone towers and the potential sale of some of its West African assets.
Stake in IHS Holding: MTN holds a stake in New York-listed tower owner IHS Holding. The company is considering selling down its stake, but trading prices and a dispute with the tower firm's management have caused delays.
The partnership between MTN and Mastercard reflects the growing interest in leveraging mobile technology and digital services to cater to the needs of Africa's burgeoning population. This move also aligns with the broader trend of digital transformation in various industries across the continent.