MTN added more than R11bn to its market capitalisation on Wednesday as Africa’s largest mobile operator rose past rival M-Pesa to become the biggest mobile payments business on the continent by users. The group is looking to grow the mobile payment business by bringing in outside partners in the second half of the year.
The group, now worth R366bn, reported that it now has 57-million monthly active users, generating 10-billion transactions and a total transaction value of $239bn (R3.625-trillion) in the year to end-December 2021.
That puts MTN’s fintech operation ahead of Vodacom and Safaricom-run M-Pesa, which at the start of March had 51-million customers. M-Pesa had been Africa’s largest and best-known mobile payments business.
Shares in MTN, which have rallied 156.25% over the last 12 months, were up 4.23% in afternoon trade on Wednesday.
MTN CEO Ralph Mupita said the group is completing the separation of the fintech business as a stand-alone business, rather than a division of its mobile business. Once done, the next phase is bringing on strategic partners to help scale the business further.
“Step two is that, once we have completed all the reorganisation, we will engage and look for strategic minority investors. Strategic because they can help us to accelerate growth in our verticals,” Mupita told Business Day.
MTN, which recently changed its corporate image, has signed a deal with one such partner, Sanlam, which will help to push the insurance part of its financial services unit.
Strategic partnerships
In 2021, MTN and Sanlam, Africa’s largest nonbank financial services group, formed a $100m joint venture to roll out life insurance, phone insurance, car insurance and basic savings products to the continent’s rapidly expanding consumer market.
The group has strategic partnerships with Visa, MasterCard and Nigerian payments business FlutterWave.
MTN’s mobile money business is estimated to be worth $5bn.
A big part of the separation plan for fintech — expected to happen by June — is getting final regulatory approvals from Nigeria authorities. In November, MTN received a provisional licence to operate its mobile money platform in the West African country, putting another block in place for the group to reach its goal of generating a fifth of its revenue from fintech.
Market players believe Nigeria, MTN’s largest market, will be a key driver of growth in fintech.
Roy Mutooni, an analyst at Absa Asset Management, said MTN’s fintech business showed solid growth. “The key thing will hinge on whether they get the final approval to start-up the PSB [payment service bank] business in Nigeria, which we believe will be the anchor for this segment.”
This comes as the group restored its full-year dividend, telling shareholders they should expect a growth in payouts, as it benefits from a cost-cutting drive and growing demand for data and digital services.
MTN declared a 300c final dividend, from none previously, representing about a R5.65bn payout. The mobile operator said shareholders should expect a minimum of 330c for 2022.
The group said Covid-19 proved beneficial for cashless payments, with MTN’s service revenue growing 18.3% to R171.8bn to end-December, while headline earnings rose 32% to R17.78bn.
Data revenue grew 36.5% due to a 53.3% increase in data usage. MTN said higher demand for online work, education, social interaction and entertainment was initially triggered by the effects of the pandemic, but was sustained in 2021.
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