MTN Group Ltd. announced an increase in its fintech transaction volumes last year, despite facing its most substantial profit decline in over three decades due to the devaluation of the Nigerian naira.
With an impressive 72.5 million active users on its mobile-money platform, MoMo, MTN recently sealed a deal with Mastercard Inc. valuing its fintech arm at $5.2 billion. MTN also witnessed an impressive 32.2% increase in mobile money transactions.
CEO Ralph Mupita expressed plans for a potential second round of minority investment into the fintech division, with a willingness to sell up to 30% of the business at a suitable valuation.
Africa’s rising tech stars are increasingly relying on mobile devices to access essential services like banking, propelling a rapid expansion in the fintech arena for telecom giants like MTN.
MTN’s competitors, including Airtel Africa Plc, Safaricom Plc, and Vodacom Group Ltd., are also transitioning towards digitalization to capitalize on this rapidly growing market. Airtel Africa, for instance, is contemplating listing its mobile money arm.
Inflation and currency devaluation in key markets, mostly Nigeria, severely impacted MTN’s profitability. Net income dropped by 79% to 4.09 billion rand ($215.5 million) in 2023 compared to the previous year. Despite this setback, the company managed a 6.8% increase in group service revenue, reaching 210.1 billion rand.
Despite challenges, MTN’s subscriber base expanded by 2% to reach 294.8 million. However, the company’s declared final dividend of 3.30 rand per share fell short of analysts’ expectations.
Mupita acknowledged ongoing macroeconomic challenges, particularly in Nigeria, and revealed discussions with regulators to adjust tariffs and renegotiate tower contracts.
Looking ahead, MTN intends to sell an additional 11% stake in its Nigerian business to local investors, subject to favorable market conditions.
To address the vulnerability of undersea cables, MTN is building a new fiber network that will connect ten African countries. This project, alongside the strategic separation of their fiber business, shows MTN’s commitment to strengthening Africa’s digital infrastructure.