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HomeCompany NewsMastercard's investment in MTN fintech unit to unlock hidden value ~CEO

Mastercard’s investment in MTN fintech unit to unlock hidden value ~CEO

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The CEO of South Africa’s MTN Group said on Tuesday he plans to bring in minority partners in fintech and fibre and then list the businesses as separate entities to reach a market capitalisation of more three times its net asset value (NAV).

Africa’s largest telecom service provider sold an undisclosed minority stake in its fintech business to U.S. payments giant Mastercard on Monday and its CEO Ralph Mupita said the next focus will be on MTN’s fibre assets.

With its share price trading at around 135 rand, compared to an NAV of 61.88 rand per share, MTN has a current market capitalisation of some 258 billion rand ($13.5 billion).

Raising its market value to more than three times its current NAV would result in a market cap of more than 350 billion rand.

MTN has been sharpening its focus on Africa since the COVID pandemic to tap into the continent’s growing demand for high-speed internet and digital and payment services and to counter rival Vodacom’s growing regional presence.

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These efforts have increased MTN’s market value by almost five times in the last three years, but Mupita told journalists that there was more to come, although separately listing the fibre and fintech divisions could take up to four years.

“There is an enormous amount of hidden value in the MTN business,” Mupita said.

MTN would primarily focus on core connectivity business, fintech and fibre to unlock the value, but this would entail continued heavy investments in these businesses.

While it would continue to scout for more stake sales in its fintech business, by next year it would be able to bring in some investments in the fibre business as well, he said.

MTN is also banking on the lifting of sanctions on Iran, its second biggest market after Nigeria with a valuation of 16 billion rand, or more than a tenth of its NAV, Mupita said.

Analysts ascribe zero value to the Iranian asset.

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