MTN sells stake of R99-billion fintech business to Mastercard

Africa’s biggest wireless carrier, MTN has revealed that the second-largest payment-processing corporation worldwide, Mastercard has agreed to take a minority stake in its financial-technology business, valued at $5.2 billion (R98.71 billion) by the company.

MTN has not yet revealed the actual value of the deal, but in a statement that was released on Monday, the Chief Executive Officer for MTN, Ralph Mupita said that the signing of the definitive investment agreements is set to take place in the very near term.

Speaking to the media, Mupita also revealed that 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 has opened a lucrative and fast-growing space in the fintech sector for wireless carriers.

A lot of attention date has been on mobile-payment systems, with a wave of fast-growing startups including Flutterwave and Interswitch emerging in the industry. The rivals of the telecommunications company, 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.

Airtel already pulled in Mastercard as an investor in its mobile-money unit. India’s Jio Platforms, the digital arm of billionaire Mukesh Ambani’s Reliance Industries, set an earlier precedent by attracting capital from Facebook and Silver Lake Partners in 2020.

Previously, MTN said that it has 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.

MTN also has a stake in New York-listed tower owner IHS Holding that it may sell down, although the tower firm’s low trading prices and a dispute with its management has delayed any sale in the near-term.