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HomeCompany NewsMastercard takes minority stake in MTN fintech unit worth $5.2 bln

Mastercard takes minority stake in MTN fintech unit worth $5.2 bln

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MTN Group said on Monday it has signed a Memorandum of Understanding with Mastercard Inc. to take a minority stake in its financial-technology business, which the company values at $5.2 billion.

The shares of the telecom firm immediately rose as much as 10 percent on the Johannesburg Stock Exchange (JSE) in early trading.

The deal will be structured in two parts, including a commercial agreement on payments and remittances that uses Mastercard’s technology infrastructure to expand in Africa and the investment into a minority stake, MTN Chief Executive Officer Ralph Mupita said on a video call on Monday.

The size of the stake will be disclosed when the deal closes, he said.

In a statement released on Monday, the telecom giant said the parties MoU was based on a “cash and debt-free basis.”

“Following the bespoke process to identify and potentially introduce strategic minority investors into MTN Group Fintech, we executed commercial agreements with Mastercard to support the acceleration and growth of our fintech business’s payments and remittance services.

“MTN and Mastercard also signed a memorandum of understanding, which provides for a minority investment by Mastercard into Group Fintech based on a total enterprise valuation of about $5.2 billion for the business on a cash and debt-free basis. 

“Signing of the definitive investment agreements is expected to occur in the very near term as we approach finalization of customary due diligence.

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“The closing of the investment will be subject to customary closing conditions,” the firm said in the statement.

At the end of June 2023, we had 292 million subscribers with whom we worked to create shared value. This subscriber base, 4 percent higher than the same period last year, benefited from lower data rates and improved access to broadband services.

To facilitate the digital economy, we increased the number of active data users by more than 7 percent to nearly 140 million, reported a 19 percent increase in overall data traffic, and improved data affordability by reducing the average effective rate per megabyte by more than 22 percent.

“We delivered a resilient performance in H1 23, and we made good strategic progress against a tough macro backdrop,” said MTN Group President and CEO Ralph Mupita.

“In South Africa, we were very encouraged by the improved network availability on the back of our power-resilience investment, resulting in a stronger Q2 23 performance than Q1 23,” he said.

“By end-June, MTN South Africa’s network availability was more than 90% despite severe electricity shortages across the country.

“In Nigeria, we delivered a very strong operational result, having navigated the cash shortages in Q1 and increased inflation,” Mupita said.

“The policy changes implemented in Nigeria in Q2 23 have short-term negative impacts, but we see these as being very constructive for the investment climate in the medium to longer term.”

(Edited by Oludare Mayowa; omayowa@globalfinancialdigest.com; Newsroom: +234 8033 964 138)

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