MTN Fintech business is set to be sold to Mastercard at $5.2bn
By Ralph Tathagata
MTN and Mastercard are set to sign a memorandum of understanding, which provides for a minority investment by Mastercard into the MTN Group Fintech, based on a total enterprise valuation of about $5.2 billion for the business on a cash and debt-free basis.
The signing of the definitive investment agreements was expected to occur in the very near term as both companies approach finalization of customary due diligence.
According to a financial statement released by MTN Group on Monday, the closing of the investment would be subject to customary closing conditions.
The statement further revealed that the MTN Group Fintech business delivered on its rapid expansion plans. The volume of transactions increased by 37 per cent to 8.3 billion in the first half of the year. These were executed by 61 million active MoMo customers.
“MTN Group’s service revenue grew 15 per cent to almost R108 billion in constant-currency terms. This was driven by increases in revenue from data services of 24 per cent and from fintech services of 22 per cent. Revenue from voice services increased six per cent in the period.
“At the end of June 2023, we had 292 million subscribers with whom we worked to create shared value. This subscriber base – four per cent higher than the same period last year – benefited from lower data rates and improved access to broadband services. To facilitate the digital economy, we increased the number of active data users by more than seven per cent to nearly 140 million; reported a 19 per cent increase in overall data traffic; and improved data affordability by reducing the average effective rate per megabyte by more than 22 per cent,” the statement added.
It continued: “We continued to invest in world-class networks and platforms for the people of Africa, committing R17.2 billion in capital expenditure in the first six months of 2023. The Group’s balance sheet remained strong, with all key metrics well within the limits of our loan covenants.
“Driven by solid revenue growth and improved efficiencies, adjusted headline earnings per share (HEPS) increased by 25 per cent to 749 cents and adjusted return on equity (ROE) expanded by one percentage point to 24.4 per cent. These were in line with our medium-term guidance.”
Explaining the report, Ralph Mupita, MTN Group President and CEO, said: “We delivered a resilient performance in H1 2023 and made good strategic progress against a tough macro backdrop.”
“In Nigeria we delivered a very strong operational result, having navigated the cash shortages in Q1 2023 and increased inflation. The policy changes implemented in Nigeria in Q2 2023 have short-term negative impacts, but we see these as being very constructive for the investment climate in the medium to longer term.
“In South Africa, we were very encouraged by the improved network availability on the back of our power-resilience investment, resulting in a stronger Q2 23 performance than Q1 2023. By end-June, MTN South Africa’s network availability was more than 90 per cent despite severe electricity shortages across the country.”
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