Mastercard invests $200m to acquire stake in MTN's fintech unit
TLDR
- Mastercard plans to invest $200 million in MTN MoMo, the fintech arm of MTN, acquiring a 3.8% stake in the company.
- This investment values MTN Group Fintech at $5.2 billion and will help MTN expand its fintech business.
- MTN Group aims to separate its financial services division and expand its telecoms business.
Six months following the initial announcement, Mastercard has disclosed its intention to invest $200 million in MTN MoMo, the fintech arm of telecommunications giant MTN. This investment will result in Mastercard acquiring a 3.8% minority stake in MTN MoMo.
MTN Group confirmed the definitive agreements with Mastercard this week. Upon completion of the transaction, MTN Group Fintech will be valued at $5.2 billion on a cash and debt-free basis, excluding any existing cash reserves or outstanding debt.
Meanwhile, in 2021, Mastercard inked a deal with Airtel Africa, one of MTN’s competitors, that saw the India-founded telecom receive $100 million for its mobile money business
Key Takeaways
The Mastercard deal comes when MTN Group wants to expand its fintech business. The telco intends to separate its financial services division while expanding the scope of its telecoms business. It’s not just Airtel and MTN that have lofty fintech ambitions. Across Africa, Safaricom, via M-Pesa, has dominated the Kenyan mobile money business for years. The telecom operator, alongside South Africa’s Vodacom, is also keen on separating its fintech arm from the traditional telecom business. There’s an incentive to push fintech activities for these telecommunications carriers in Africa because the continent is gradually shifting from primary voice and text mobile to digital services. The financial services these telecom operators offer will see them compete with already established companies in Africa’s fintech space, including Interswitch, Flutterwave, Chipper Cash, and MFS Africa.
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