Africa’s largest mobile network operator, MTN, has announced that it is seeking to include three (3) more strategic investors in its Fintech unit.
This announcement is coming after the telecoms company recently partnered with Mastercard to purchase a minority stake in its Fintech subsidiary, MoMo.
On Monday, MTN announced that it signed a memorandum of understanding (MoU) with Mastercard for strategic investment and will also use the payment network processor’s technology to offer more services.
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In a recent development, the company’s group CEO Ralph Mupita recently announced that MTN is open to selling a maximum of 30% of its Fintech business.
In his words,
“We are open to selling up to a maximum of 30% of the Fintech business. There might be three or maybe even four strategic partners within that”.
He further highlighted the importance of mobile money services to Africans, which he stated that “with mobile money and Fintech services, they can leapfrog people from not having any financial services to using the phone to provide a lot of financial services”.
According to Mupita, MTN is Africa’s largest wireless operator which has 60 million users for its Fintech unit and currently offers basic services like cash-in, and cash-out.
Meanwhile, despite the increasing use of electronic and digital channels in Africa’s financial sector, nearly half of the continent’s population still does not have a traditional bank account and would rather use cash, putting roadblocks to accessing digital financial services. MoMo which was rolled out in May 2022, one year after its launch is still yet to be adopted by millions of Nigerians.
Mupita had earlier stated that MTN wants to tap into growing investor interest in the African mobile money businesses that allow phone subscribers to send or receive money outside banks and increasingly sell ancillary services such as microinsurance.
MTN seeking minority investors in its Fintech units can be a strategic move to provide the company with so many opportunities.
One reason for MTN seeking minority investors, could be to infuse additional capital into the business. It is understood that the Mobile Money sector requires investments in technology, infrastructure, and expansion to stay competitive and meet growing customer demands. Bringing in minority investors can provide the necessary funds without diluting the majority ownership and control of MTN.
Also, strategic minority investors can bring in expertise, industry knowledge, and operational resources that could enhance the growth and efficiency of the MoMo business. This can include access to new markets, technology, regulatory insights, or other valuable assets.
As MTN looks to expand its Mobile Money services into new regions or markets, partnering with a local or regional investor can offer advantages in terms of cultural understanding, regulatory compliance, and market penetration.
Notably, collaborating with minority investors could lead to strategic alliances that benefit both parties. This might involve leveraging synergies between the investor’s existing business interests and MTN’s Mobile Money operations.
A minority investment could be a way for MTN to unlock value from its Mobile Money business, which might be growing rapidly and capturing a significant share of the market. This could provide MTN with a means to realize some of the value it has created in the business.