By Jeph Ajobaju, Chief Copy Editor
MTN, Africa biggest mobile phone operator by subscribers, seeks to value its mobile money unit up to $6 billion as it prepares to sell or list a minority stake to draw global investors enticed by fintech assets now on the rise.
MTN Chief Executive Ralph Mupita told the Financial Times that the unit, which added almost 12 million new users to a total of more than 46 million last year, should be worth between $5 billion and $6 billion and the group would spin it out within the next year.
“We think the best way to run these businesses is to structurally separate them,” Mupita said, adding that it would unlock value hidden in the $11 billion market capitalisation of network carrier.
MTN wants to tap into growing investor interest in mobile money businesses built by African telecoms in the past decade that allow phone subscribers to send or receive money outside banks and sell ancillary services such as microinsurance.
Basic details
Mupita outlined basic details about the future of its mobile financial service, which is set to be separated as part of a strategy to help cash in on various assets unveiled in March.
The company, which operates across several of Africa’s largest markets, has long prized its mobile money offer with the segment often cited as one of the major growth areas in the business.
Mupita said MTN planned to structurally separate the business within the next year.
Funds raised from its money and infrastructure assets will go into cutting the company’s debt stock, adding to the disposal of several parts of its non-core assets in the last two years.
MTN is also in the process of selling off non-core assets in the Middle East as it plans to focus its efforts on Africa.
The operator is not alone in seeking to raise money on the strength of its mobile financial services business. Its regional rival, Airtel Africa, is selling two separate stakes in its equivalent to investment company TPG and Mastercard.
Bloomberg refers to Global System for Mobile telecommunications Association (GSMA) which puts Africa’s transaction values at $490 billion.
The publication reports that MTN and its counterpart Safaricom of Kenya were planning to bid for an Ethiopian operating licence, although it is uncertain that mobile-money services could be rolled out with the initial licences in the country.
Nigeria has been a laggard in rolling out mobile-money services, providing some provisional licences.
Licence MTN, Airtel for mobile money, GSMA urges CBN
But for mobile money to scale up in the country, and be able to compete strategically in West Africa, the GSMA has asked the Central Bank of Nigeria (CBN) to extend licence to MTN and Airtel.
Head of GSMA Africa, Akinwale Goodluck, who said this recently, noted that in the last 12 months, the major development noticed in Nigeria is the grant of full operational mobile licences to two MNOs and Unified Payment.
In his view, what is required to drive financial inclusion in Nigeria is the further liberalisation of the regulatory environment.
“Importantly, it is necessary that a level playing field is created, that licences are extended to the other two big network operators in Nigeria, namely Airtel and MTN,” he added.
“Once we have all of them on board, I think we will see mobile money accelerate and we will see the kind of numbers and growth that we want. For now, Nigeria is lagging behind some of the other countries in West Africa like Ghana, Ivory Coast.”
Those countries are doing very well, Goodluck stressed, which is a “factor of the relationship between the mobile telecommunication sector and the financial and banking sector in these countries.”
A GSMA report ‘State of the Industry Report on Mobile Money’ showed that mobile money transactions rose 65 per cent in 2020 with accounts across the globe notching 1.2 billion, propelled by the need to meet financial obligations amid COVID-19.
GSMA cited a dramatic acceleration in mobile transactions during the pandemic as lockdowns limited access to cash and financial institutions.