Mastercard to buy stake in MTN’s R98.7 billion fintech unit

MTN, Africa’s biggest wireless carrier, said Mastercard Inc. agreed to take a minority stake in its financial-technology business, which the company values at $5.2 billion (R98.7 billion).

“Signing of the definitive investment agreements is expected to occur in the very near term,” MTN CEO Ralph Mupita said in a statement on Monday.

Africa’s young, tech-savvy population are increasingly using their mobile phones to bridge gaps in services, including banking. That’s opened a lucrative and fast-growing space in the fintech sector for wireless carriers.

Much of the attention to date has been on mobile-payment systems, with a wave of fast-growing startups, including Flutterwave and Interswitch, emerging in the industry.

MTN rivals, including Airtel Africa, Nairobi-based Safaricom and South Africa’s Vodacom, are all at various stages of transforming from basic voice and text mobile use to digitalization, with a broad aim of separating and monetizing the businesses in the longer term.

Airtel has already brought in Mastercard as an investor in its mobile-money unit. India’s Jio Platforms, the digital arm of billionaire Mukesh Ambani’s Reliance Industries, set an earlier precedent by attracting capital from Facebook Inc. and Silver Lake Partners in 2020.

MTN has said previously it plans to raise R25 billion from asset sales. Its most recent disposals include 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 that it may sell down, although the tower firm’s low trading prices and a dispute with its management have delayed any sale in the near term.