Mastercard pumps R3.8 billion into MTN fintech unit

Mastercard is investing up to R3.8 billion ($200 million) into MTN’s fintech unit, which is valued at R98.8 billion ($5.2 billion).

MTN announced today that it has signed a definitive agreement with Mastercard to make this minority investment into MTN Group Fintech B.V. on a cash and debt-free basis.

The company said this agreement complements the larger commercial relationship between MTN and Mastercard to support the continued development and growth of technology and infrastructure to drive financial inclusion across the African continent. 

“This commercial relationship is a key enabler for the acceleration of our fintech business’ payments and remittance services,” MTN said.

“MTN will continue to explore opportunities for other value-enhancing partnerships and investments, subject to market conditions, with strategic partners and long-term investors.”

In August last year, MTN announced that Mastercard agreed to take a minority stake in its financial technology business, which the company values at R98.8 billion.

MTN further said that it is seeking as many as three more strategic investors in addition to Mastercard for its fintech unit.

“We are open to selling up to a maximum of 30% of the fintech business,” MTN CEO Ralph Mupita said. 

“There might be three or maybe even four strategic partners within that.”

Africa’s young, under-banked population is increasingly using mobile phones to bridge gaps in services. That’s opened a lucrative and fast-growing space in the fintech sector for wireless carriers, Bloomberg reports.

Much of the investment to date has been in mobile payment systems, with a wave of fast-growing startups such as Flutterwave and Interswitch emerging.

MTN is Africa’s largest wireless operator. It has 60 million users for its fintech unit, which currently offers basic services like cash-in and cash-out, according to Mupita. 

“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,” Mupita said.