Amid the ongoing move to separate its fintech business that would see Mastercard acquire a substantial stake in the vertical, MTN Group has claimed that the restructuring process in Nigeria is facing threats around regulatory approval.
MTN CEO, Ralph Mupita disclosed this in an interview with Bloomberg. According to him, while the process is going smoothly enough in Ghana and Uganda, this hasn’t been the case in their Nigerian market.
“Nigeria has a bit more complexity with some more regulatory processes to work through,” Mupita told Bloomberg.
MTN is currently in the process of partitioning its fast-growing financial services divisions into three markets. The project, to be carried out in Nigeria, Uganda and Ghana, aligns with the Group’s goal to unlock value from its fintech operations, which have become a key revenue driver.
As part of the drive, MTN and Mastercard formalized a memorandum of understanding in 2023 outlining a strategic partnership. The partnership would see Mastercard invest $200 million into securing a minority stake in MTN Group Fintech. The ongoing deal values MTN’s fintech business at $5.2 billion on a cash- and debt-free basis.
“Following the bespoke process to identify and potentially introduce strategic minority investors into MTN Group Fintech, we executed commercial agreements with Mastercard to support the acceleration and growth of our fintech business’s payments and remittance services,” MTN said in 2023.
The project, almost in its completion stage, is subject to customary closing conditions and final closures. The telecom firm also stated that the definitive investment agreements were expected to be signed in the near term, paving the way for Mastercard’s entry as a strategic minority investor.
In terms of financial performance, its fintech service revenue was up by 28.5 per cent in its annual financial report for the year ending December 31, 2024. The fintech’s transaction value increased by 35 per cent in constant currency at $321bn. In addition, fintech advanced services revenue (including bank tech, remittance, and payments) surged by 52 per cent.
The volume of fintech transactions on MTN’s networks rose by 15 per cent to more than 20 billion valued at over $320 billion. The number of active Mobile Money (MoMo) users rose by just less than 1 per cent to 63 million, slowed by initiatives in key fintech markets to enhance the quality, stickiness, and profitability of the overall fintech ecosystem.
Data revenue decreased by 12 per cent on a reported basis but increased by almost 22 per cent in constant-currency terms. Fintech revenue increased by 11 per cent on a reported basis but by almost 29 per cent in constant currency. As part of its expense efficiency programme (EEP), the company realized sustainable savings of $210 million in 2024.
Similar Read: Does MTN zap your data indiscriminately? Here is what we found.
MTN’s latest financial performance
On Monday, MTN Group reported an underlying operational and financial performance for the year-end of 2024 with a particularly strong second half. This strong performance was affected by a sharp drop in the value of the currency of one of our largest markets, Nigeria; and impairments in conflict-hit Sudan.
Its service revenue and earnings before interest, tax, and amortization (EBITDA) in constant-currency terms grew by around 14 per cent and 10 per cent respectively, they were negatively affected in reported currency terms.
In the period, service revenue of $9.8 billion was down by some 15 per cent in reported terms and reported EBITDA (before once-off items) of $3.3 billion was a third lower than it was in 2023. Basic earnings per share swung by 758 cents in 2024 to a loss of 531 cents.
Adjusted headline earnings per share (HEPS) decreased by 32 per cent to 816 cents, impacted mainly by the sharp devaluation in the naira. With a relatively more stable naira in the second half of 2024 and stronger results from MTN South Africa, second-half adjusted HEPS showed strong momentum.
The group’s financial performance was negatively impacted by its Nigerian subsidiary having suffered chronic dollar shortages that have forced authorities to devalue the naira as part of the government’s measures to stabilize the currency and attract investment.
MTN Group CEO Ralph Mupita noted that the worst should be over for the company as its Nigerian unit recovers after the naira devaluation pushed the group to an annual pre-tax loss of $243 million. Coupled with high inflation and interest rates, this has driven up costs and widened MTN Nigeria’s pre-tax loss by more than 200 per cent to N550.3-billion.
“That pain which we’ve had for 18 months, is abating somewhat … the business is growing very strongly. So I’m actually very bullish and confident that we’ll see strong recovery in Nigeria,” he said.
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