CONFIRMED: MTN to complete separation of Fintech unit from listed business before June 

MTN is expected to complete the separation of its financial technology (Fintech) business from its listed company under MTN Uganda in the first half of this year. 

The separation, which MTN Group chief executive officer Ralph Mupita told Bloomberg is part of the requirements for a reorganization in preparation for a $200 million (UGX 732.2 billion) capital investment by Mastercard in the company’s Fintech business, is more advanced in Uganda and Ghana, but remains behind schedule in Nigeria due to a complex regulatory landscape that requires additional processes before the separation is finalised.

In July last year, MTN Uganda, in details contained in a notice, in which it also announced the sale of the 7% unsold shares from its initial public offering (IPO), indicated that it had sought approval from its board to separate the Fintech business, which includes mobile money, from its stock portfolio as part of Ambition 2025 that sought to reposition assets across Africa “to build value and attract third-party capital and partnerships”. 

“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 telco said then. 

In Uganda, the Fintech business includes a number of units among them mobile money, insurance, airtime lending and e-commerce. 

The separation is also expected to impact the listed company, in which MTN Uganda in the October 2021 IPO Prospectus had listed Mobile Money as its subsidiary, and was part of the initial public offering that floated a 20 percent stake in one of Uganda’s most profitable company. 

It was not immediately clear how the planned separation, which has now been confirmed, will impact the already listed company, having since November 2021, traded as a single unit. 

In its July 2024 notice, MTN Uganda had, however, noted that the “the separation of the financial technology and infrastructure businesses will be undertaken on an arms’ length basis” and will ensure equitable treatment of minority shareholders, many of whom are within the 20% band.  

At Group level, MTN’s Fintech business has grown substantially with the company noting that in the period ended December 2024, it processed more than $320 billion (UGX 117 trillion) in mobile money transactions, a 35% year-on-year increase. 

Last year, Mr Mupita indicated that MTN Mobile Money (Africa) was valued at $5.2 billion (UGX 19 trillion) with 72.5 million active users. 

The separation, therefore, is a key consideration in which – for a capital investment of $200m – Mastercard will take up a minority stake estimated at 30% in the Fintech business. 

In Uganda, MTN Mobile Money, which is run as a separate business from telecommunications services as a requirement under the National Payment Systems Act, has registered substantial growth, registering an annual compound growth rate of above 15%. 

The growth suggests rapid adoption of financial technology that offers payment alternatives, money transfer, credit and saving options.

Mobile money has become a key revenue stream for MTN, which together with Xtratime, a credit product under the Fintech segment contributed a combined UGX 947 billion to MTN Uganda’s UGX 3.2 trillion total earnings in the 12 months to December 2024. 

MTN Group’s Fintech expansion aligns with a shift in which telcos are diversifying into the digital finance space. 

Telcos still generate the largest share of their revenues from voice services but have in the last 10 years seen rapid growth in new revenue streams such as mobile money and data that continue to cover up declines in voice incomes.  

For instance, in the period ended December 2023, MTN Uganda generated UGX 1.2 trillion from voice, while data and mobile money revenues grew to UGX 811 billion and UGX 920 billion, respectively. 

The figures above illustrate the importance of mobile money to MTN and its separation from the listed company will be a key factor in how the stock price moves going forward.

Mobile money remains one of the fastest growth markets, driven by money transfer, payment, saving, and micro lending.