MTN shareholders will today vote on a matter that has tested investor confidence and drawn due attention on one of Uganda’s most profitable companies for almost two months now.
The vote, which had been planned for July 2, is key in MTN’s plan to structurally separate mobile money from the listed stock portfolio.
However, this has not come without some pushback, especially from shareholders, who accuse the telecom of rushing a complicated process that they had very little understanding of.
From the outset, MTN remained muted about its plan to structurally separate Fintech from its stock portfolio.
In fact, on June 13, 2024, after it had been reported that the telecom was in the process of spinning off its Fintech unit, MTN told investors there was no such plan.
The telecom insisted mobile money was still 100% owned by MTN.
Separation first announced
Yet, in a May 2024 carefully worded notice for its secondary offer to sell the 7% shares that had remained unsold from its IPO, MTN had indicated that as part of Ambition 2025, it had sought approval from its board to separate mobile money from its stock portfolio.
The separation, MTN said at the time, was being spearheaded at the Group level “to build value and attract third-party capital and partnerships” into its Fintech business.
“MTN Group is consolidating its infrastructure assets and platforms across its entire Africa footprint to … attract third-party capital and partnerships. In Uganda, this includes the phased managed and structural separation of MTN Uganda’s financial technology [Fintech] and fibre businesses,” the telecom said then.
Yet, for months things remained vague, with investors asking questions that were either ignored or answered in a manner that left more questions.
In fact, until March 2025, investors understood very little of what was happening, yet MTN indicated that it was fast-tracking the separation with the target of completing it in the first half of 2025.
The pushback
Left on their own, some investors seemed to be agitated about the whole transaction and with little help from the telecom and its associates, some decided to take matters into their own hands.
On June 30, after MTN had indicated it would hold an extraordinary general meeting to vote on the matter on July 2, a group of shareholders represented by Reeve Advocates petitioned Capital Markets Authority and issued a caveat emptor – a legal “buyer beware” notice.
Why? Because MTN, they said, had failed to disclose key details of the transaction, yet it had “a potential adverse interest on the security interests of shareholders, for which MTN has not provided sufficient comfort”.
“… we urge fellow shareholders, the public and relevant regulators to exercise caution and seek complete information prior to voting … should the directors not provide this information … we will not hesitate to seek legal redress,” the notice reads in part.
Other third-party stakeholders such as Rural Digital Media Uganda Limited, which in August 2024 had entered an exclusive contract with MTN Mobile Money to provide merchant quality management services, also opposed the planned Extraordinary General Meeting.
It accused MTN of failure to meet required transparency levels and key disclosures, leaving their partnership in which it had recruited over 400 employees unclear.
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The concerns could have been pushback that MTN had not anticipated, forcing the telecom to postpone the planned extraordinary general meeting to today.
The telecom has also since volunteered key disclosures and launched shareholder townhall meetings, which started with Kampala, before spreading to other regions.
In one of the townhall meetings at Sheraton Hotel Kampala on June 11, some shareholders wondered why MTN had not engaged sufficient sensitisation on a matter that deeply touched their interests and why the process was being rushed.
However, MTN indicated that the process, which had started in 2021, had been ongoing, starting with a managed separation, which moved regulatory mandate to Bank of Uganda and the creation of separate boards.
MTN also informed shareholders that it had now taken on the second phase, which would transition MTN Mobile Money into a side-by-side business instead of being an MTN Uganda subsidiary.
Expected to have completed the separation
MTN had expected to complete the separation before June, as part of plans to form an independent group financial technology company – MTN New FinCo.
But concerns among shareholders, including the fear that the separation could strip MTN Uganda of one of its most profitable units, delayed the process.
In March, MTN Group chief executive officer Ralph Mupita had indicated the separation was advanced and would be completed before the end of the first half of this year.
MTN has previously indicated that by bundling mobile money with other African Fintech units, MTN Group hopes to attract big-ticket capital and scale rapidly.
Profitable unit
Mobile money is a rich unit, which in 2024, raked in UGX982 billion, contributing a 31% stake on MTN Uganda’s total revenue.
The unit has seen its assets grow to UGX1.63 trillion, while profits have soared to UGX260 billion.
In 2024, mobile money contributed at least 60% of the UGX303 billion that MTN Uganda paid out in dividends.
MTN has also indicated that if the separation is approved, minority shareholders will retain exposure to the mobile money unit through a Trust, which would hold a 23.985% stake in the MTN new FinCo.
Capital Markets Authority said MTN had assured them that it would “make sure that information regarding the separation is available to the public, and would go an extra mile to break it down, in simple terms.
