African telecommunications powerhouse, MTN Group Ltd., is casting a wider net in its efforts to bring in additional investors. The company’s CEO, Ralph Mupita, recently revealed that MTN is considering integrating up to three or perhaps even four more strategic partners in its telecom unit. He mentioned: “We are open to selling up to a maximum of 30% of the FinTech business.” This follows the recent investment from Mastercard which spiked the valuation of MTN’s FinTech unit to a staggering $5.2 billion.
MTN’s Fintech Offerings and Mobile Banking Adoption
- Services: MTN proudly serves 60 million users through its FinTech offerings. The suite includes ‘cash-in’, ‘cash-out’, and other rudimentary banking services.
- Africa’s Digital Landscape: A considerable fraction of the African population remains unbanked. As such, many have turned to mobile payments as a primary means of bridging this financial service gap. Recognizing this, Mupita pointed out: “With mobile money and FinTech services, you are able to leapfrog people from not having any financial services to using the phone to provide a lot of financial services.”
- Challenges on the Horizon: Despite the technological advances, almost 50% of Africa’s inhabitants lack a conventional bank account, thereby relying heavily on cash. This presents certain challenges, given Africa’s fragmented market, characterized by multiple currencies, distinct banking systems, and a diversity of languages.
Global Perspective on Africa’s Financial Evolution
Offering a global view of Africa’s growing digital payment landscape, Praveksha Maharaj, director of partnerships MEA at Entersekt, mentioned:
“The majority of Africans have embraced technology at scale and managed to leapfrog into the future of digital payments.”
However, Maharaj also underscored that despite the advancements, many transactions still involve cash, largely due to the continent’s varied currencies and fragmented banking networks.
MTN and Mastercard’s Collaboration
Mastercard’s commitment to invest in MTN’s FinTech business is not an isolated event. Just a couple of years ago, the global payment giant poured $100 million into Airtel Africa’s mobile payments sector, valuing the business at $2.65 billion. Such investments from global stalwarts like Mastercard hint at the maturation and increasing trust in non-conventional banking and financial services.
This partnership aims not only at capital investment but also at technological symbiosis. As per MTN’s recent half-yearly report:
“Mastercard will enable MoMo [mobile money] consumers to pay globally and MoMo businesses to digitize their payments and accept payments beyond MoMo users.”
MTN’s Financial Performance
- MTN’s financial data showcases a positive trajectory: User Base: The fintech user count stood steady at 60.5 million.
- Transaction Volumes: There was a notable 37.3% growth, with the transaction value surging by 61.6% to $135.2 billion.
- Fintech Revenue: MTN recorded a 21.7% year-on-year increment in the first half of the year.
Mupita expressed his satisfaction with the progression, “We are pleased with the sequential recovery and trajectory of our fintech revenue.”
MTN’s strategy to onboard more investors and expand its fintech offerings aligns with its Ambition 2025 project, which focuses on a redefined strategy to separate infrastructure assets and platforms. As Africa continues to embrace the future of digital payments, collaborations between giants like MTN and Mastercard indicate a promising horizon for the continent’s financial landscape.