Mastercard is Investing $200 Million Into MTN’s Fintech Unit, Elevating Its Valuation to $5.2 Billion
MTN, Africa’s largest mobile operator, has disclosed that MasterCard, a global payment company, is investing up to $200 million in its fintech business. The telecoms company announced yesterday that it had finalized definitive agreements outlining the transaction with Mastercard, as stated in a release today.
According to Mybroadband in South Africa, the transaction values MTN Group Fintech at $5.2 billion, considering cash and debt-free bases. Consequently, Mastercard is acquiring a minority stake in the business, estimated at around 3.8%, for the specified amount of $200 million.
In addition to enhancing MTN’s see-through valuation, the influx of cash could bolster the company’s balance sheet by temporarily substituting dividends from subsidiaries and partially offsetting the impact of increased 2023 capital spending guidance, both influenced by forex fluctuations.
MTN has previously announced plans to generate $1.3 billion from asset sales, including recent disposals such as the sale and leaseback of its South African mobile phone towers and a proposed sale of certain West African assets.
MTN, valued at about R176 billion on the JSE, has been looking actively for strategic partners for its fintech business, looking to sell up to 30% of it. Fintech includes its mobile money (MoMo) platform, insurance, airtime lending and e-commerce, and it contributed just under a tenth of the group’s R113 billion in its first half to end June.
“This commercial relationship is a key enabler for the acceleration of our fintech business’ payments and remittance services,” the statement by MTN said. The company further added that it would continue to explore opportunities for other value-enhancing partnerships and investments with strategic partners and long-term investors.
