By Adedapo Adesanya
MTN Group on Monday said it had signed an initial agreement with global payments giant, Mastercard, to sell a minority stake in its fintech arm as part of its plans to raise fresh capital.
The South African telecommunications company said it had signed a memorandum of understanding (MoU) with Mastercard for a minority investment in its fin-tech arm, valuing it at around $5.2 billion, around 40 per cent of MTN’s total market value.
This is according to its CEO, Mr Ralph Mupita, who said, “Signing of the definitive investment agreements is expected to occur in the very near term.”
This deal could boost MTN’s valuation, which has been impacted by the global market environment, and could help the company’s balance sheet, which has been affected by forex shortages.
This move will also boost MTN’s competitiveness with other top fintech players on the continent, like Futterwave as well as against its telco rivals playing in the field, like Airtel Africa, Safaricom, and Vodacom Group Limited.
This is not the first time that Mastercard will be playing in the telco sector, as it bought a $100 million worth stake in MTN’s rival, Airtel Mobile Commerce BV.
MTN had been trying to unlock value in its financial technology and payments arm amid crippling local power cuts, which have forced it to set aside extensive capital for backup power systems.
It also planned to raise $1.3 billion from asset sales, including the sale and lease-back of its South African mobile-phone towers and a plan to sell some of its West African assets.
It also has a stake in New York-listed tower owner IHS Holding Limited, but a dispute and lower trading share issue have provided no clarity yet. Shareholders in the telecommunication tower company accused the company of hiding information, stopping a move for restructuring, and underinvestment.
