MTN Uganda Begins Gradual Separation of Mobile Money Business to Attract Fintech Investors

MTN Uganda has officially announced a landmark proposal to structurally separate its mobile money and fintech operations from the core telecommunications business, a move set to redefine the company’s financial services footprint in Uganda and align to the Group’s Ambition 2025 strategy.

The proposed transaction, to be tabled for shareholder approval during an Extraordinary General Meeting (EGM) on Wednesday, July 2, 2025, involves the amalgamation of MTN Mobile Money (U) Limited (MTN MoMo) into a newly created entity, MTN New FinCo, which will become the surviving company.

Once complete, MTN MoMo will be deregistered from the companies register, and MTN New FinCo, which is already licensed by the Bank of Uganda is set to fully assume the operations, assets, and regulatory obligations of the former fintech subsidiary.

“The structural separation aligns with one of the central pillars of MTN’s Ambition 2025, which aims to build valuable platforms and transform the MTN portfolio… a deliberate shift by MTN to evolve from a traditional telecom operator into a technology-driven enterprise that captures the growth of digital financial services,” the telco said in a statement. 

The separation, which MTN Group chief executive officer Ralph Mupita told Bloomberg early this year, 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 in Uganda, Ghana and Nigeria. 

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”. 

According to MTN Uganda, separating the telecom and fintech operations allows each business to be managed independently and according to its specific market and regulatory demands.

“Operating the businesses independently will enhance their individual earnings potential and enable fintech-focused partners to bring on board capital, technologies, and critical capabilities,” the company stated in a circular shared with shareholders.

Enid Edroma, MTN Company Secretary in a signed off EGM circular noted that the implementation of the Proposed Transaction is subject to several conditions, including regulatory approvals, no-objection confirmations, and compliance with any regulatory conditions required by authorities.

New Ownership Structure

Under the proposed MTN New FinCo ownership structure, MTN Group Fintech will hold a 76.015% stake, while 23.985% will be held by a Trust on behalf of MTN Uganda’s minority shareholders—reflecting their existing proportionate stake in MTN Uganda.

This Trust is being established as a temporary transitional mechanism to allow minority shareholders to continue benefiting economically from both MTN Uganda and MTN New FinCo until the latter is listed on the Uganda Securities Exchange (USE)—a process anticipated within three to five years, subject to market conditions and regulatory approvals.

The Trust structure will also ensure that minority shareholders can participate in MTN New FinCo’s governance through representation mechanisms to be defined.

The telco noted that, there will be no impact on MTN Uganda’s share capital or shareholding structure as a result of this reorganisation where minority shareholders will continue to hold their current shares in MTN Uganda, and will receive dividends from both entities—MTN Uganda directly and MTN New FinCo through the Trust.

One of the notable features of the proposal is the plan to safeguard the net dividend income of individual minority shareholders tax resident in Uganda.

Currently, MTN Uganda dividends attract a 10% withholding tax for local individual shareholders. However, dividends from MTN New FinCo, a financial institution, will be subject to a 15% withholding tax for all shareholders. 

To address this disparity, MTN Group Fintech will fund a “Dividend Adjustment Trust” to effectively compensate the affected shareholders for the additional 5% tax burden while ensuring they receive the same net dividend as before.

Implications for Share Price

While MTN Uganda has expressed optimism about the positive long-term value of the new structure, it cautioned that the share price remains subject to market forces. However, it believes the “linked value proposition”—where minority shareholders benefit from both MTN Uganda and MTN New FinCo—will preserve the competitiveness of MTN shares on the USE.

Still, the company has issued a cautionary announcement in line with USE Listing Rules 2025, urging shareholders and investors to exercise prudence while trading shares during this transitional period.

Mobile Money growth 

The rapid adoption of financial technology that offers payment alternatives, money transfer, credit and saving options 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’s overall Fintech revenue rose 18.4% to UGX 256 billion in Q1 2025 from UGX 216 billion in Q1 2024. Mobile money services anchored the fintech growth at 19% to UGX 249.5 billion while other services and Xtra Time contributed the rest. 

The telco also onboarded 212,044 active agents and 100,985 merchants. Advanced fintech services such as loans, savings, marketplace surged 33.4%, lifting their share of fintech revenues to 34.1%, and fintech’s overall contribution to service revenue increased by 1.3 percentage points to 30.4%.  

Fintech subscribers also increased from 12.4 million in Q1 2024  to 13.6 million in Q1 2025.