MTN eyes $5bn+ valuation for mobile money unit

Ralph Mupita MTN.jpg

MTN, the South African telco, is reportedly eying up a valuation of more than $5 billion for its mobile money business.

According to the Financial Times (FT), the move comes as the company attempts to attract international buyers and investors to acquire a minority stake in the business, capitalising on the fast-growing fintech space.

Ralph Mupita (pictured), CEO of MTN, told the FT that the unit needs to be priced at least $5bn to $6bn and that the group would spin it the business over the next 12 months.

“We think the best way to run these businesses is to structurally separate them,” he said. Adding that the move would unlock value hidden in MTN’s $11bn market valuation.

“We think that the fintech business will be worth more than $5bn, reading across from the Airtel Africa transaction,” added Mupita, referencing its rival Airtel Africa which recently sold minority stakes in its mobile money business for $2.6 billion.

The company first announced plans to separate various parts of its business last month, as part of its Ambition 2025 plan and at the same time as publishing its financial results for 2020.

“Further to our previous announcement regarding our intention to focus on our pan-Africa strategy, we completed a comprehensive strategy review in Q4 2020 and are excited to introduce ‘Ambition 2025’,” said Mupita at the time.

“As part of this strategic repositioning, we are looking to structurally separate our infrastructure assets and platforms, such as fintech, to reveal value and attract third-party capital and partnerships into these businesses, over the medium-term.”

MTN’s mobile money business added almost 12 million new users bringing the total to 46 million last in 2020. Its financial services ventures also include an insurance joint venture with over 10 million customers.