MTN fintech boom

MTN said it increased fintech transaction volumes by a third last year, even as Africa’s biggest mobile carrier reported its biggest drop in profit in at least 30 years because of the Nigerian naira’s devaluation.

The company now has 72.5 million active users of its mobile money services, known as MoMo, and recently closed a deal with Mastercard Inc. that values the business at $5.2 billion. 

“We are looking at a second round of minority investment into the fintech business,” CEO Ralph Mupita told reporters on a call. “We are open to selling up to 30% of the business at the right valuation.”

Africa’s young, tech-savvy population is increasingly using mobile phones to bridge gaps in services, including banking.

This has opened a lucrative and fast-growing space in the fintech sector for wireless carriers. MTN’s mobile money transactions were up 32.2% for the year. 

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 Africa is mulling a listing for its mobile money business.  

Nevertheless, inflation and the devaluation of the local currency in one of its largest markets, Nigeria, resulted in much of MTN’s profit for the year being wiped out.

The South Africa-based company said net income plunged 79% to R4.09 billion in 2023 from a year earlier. Group service revenue growth slowed, increasing 6.8% to R210.1 billion. 

Mupita said he expected continued macro headwinds in the country and was in talks with regulators to increase tariffs while also renegotiating certain tower contracts in the country. 

He said that in the medium term if market conditions allow, the plan was to sell a further 11% of Nigerian business to local investors. 

MTN’s total number of subscribers climbed 2% to 294.8 million. The company declared a final dividend of 3.30 rand a share, less than the 3.37 rand average estimate by analysts on Bloomberg.

The company said it’s also started work on a terrestrial cable to connect 10 African countries. Many nations on the continent are currently struggling with a break in Internet connectivity caused by damage to undersea cables.

Mupita said the structural separation of the fibre business is a key priority for MTN. 

MTN spent 41 billion rand in the past year enhancing network capabilities across its 19 markets.