Mastercard to buy a minority stake in MTN’s fintech business

Mastercard to buy a minority stake in MTN’s fintech business

The latest in a number of Africa-focused announcements by payment giant Mastercard may be the most significant; it is widely reported to be taking a minority stake in the fintech arm of South Africa’s MTN.

That, however, is all we know about this deal with Africa’s biggest mobile company by subscribers, except that it values the arm that covers payments and remittances at more than US$5 billion.

According to a report in the UK’s Financial Times, Ralph Mupita, MTN’s chief executive, has suggested that the Mastercard investment will be finalised in “in the very near term”, though the amount of the investment and precisely when it will be effected has not been stated.

It’s not too surprising that MTN has been seeking to unlock value in one of Africa’s largest mobile money networks, or indeed that MTN shares enjoyed a boost on the news. In fact this week’s group interim results statement, which refers to a resilient H1 performance, notes that the overall value of transactions on MTN’s MoMo mobile-money platform increased by more than 61% to US$135 billion in the six months to the end of June. 

Of course MTN has recently been looking to sell a number of assets in order to raise cash and strengthen its balance sheet. It was in 2021 that it first signalled its interest in securing a minority investment in the fintech unit at a valuation of more than US$5 billion – roughly the amount stated in today’s news.

As we mentioned, this is far from the only major Africa-related announcement from Mastercard this month. In August alone it has announced a strategic partnership with fintech Lipa Later, involving buy now, pay later (BNPL) payment services in Africa, with EMIS on contactless cards in Angola, and with Airtel Africa on a new cross-border remittance service.

Nor is the MTN deal its only mobile money investment recently. In 2021 Mastercard invested US$100 million in the mobile money business of Airtel Africa, MTN’s rival, valuing that unit, at the time, at more than US$2.6 billion.

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