MTN considers listing mobile money business, targets $5bn valuation

MTN says it is considering an initial public offering (IPO) of a minority interest in its mobile money business, better known as MoMo.

Ralph Mupita, president and chief executive officer of MTN Group, said MoMo should be worth at least $5 billion to $6 billion, adding that the telco would spin it out within the next 12 months.

In March, MTN had disclosed plans to launch MoMo as a separate business entity as part of a strategy shift to refocus its business and cut $3 billion of its net debt.

MTN currently has a super agent licence and cannot fully provide banking services to customers In Nigeria. This has prevented MoMo from offering payments and remittance services, issuing debit and prepaid cards, deploying ATMs, and other tech-enabled banking services.

Separating MoMo from its telecom operations could place MTN in a better position to negotiate the acquisition of payment service banks or Microfinance Bank licence.

“We think the best way to run these businesses is to structurally separate them,” Mupita said.

He said the move would unlock value hidden in MTN’s $11 billion market capitalisation.

Recently, Mastercard invested $100m in Airtel Mobile Commerce BV, the holding company for Airtel Africa’s mobile money operations.

The deal valued Airtel Mobile Commerce BV at $2.65 billion on a cash and debt-free basis.

Mupita referenced the deal, saying ” we think that the fintech business will be worth more than $5bn, reading across from the Airtel Africa transaction.”

He said the telcommunications company added almost 12 million new users to its mobile money unit to a total of over 46 million in 2020.

Mupita said MTN wants to tap into growing investor interest in the African mobile money businesses that allow phone subscribers to send or receive money outside banks and increasingly sell ancillary services such as microinsurance.