MTN values mobile money unit at US$5bn, mulls IPO

SOUTH AFRICA – The South African multinational mobile telecommunications company MTN group is considering opening up its mobile money arm MoMo to investors.

Ralph Mupita, MTN Group’s Chief Executive Officer, announced the move on April 12.2021 in an interview with Bloomberg.

The CEO explained that at valuations similar to Airtel’s, MTN’s mobile money arm would be worth about US$5 billion.

“With similar valuations to that of Airtel, our valuation would sit at about US$5 billion,” said MTN chief executive officer Ralph Mupita.

He stressed, however, that no decision has been made yet, but an Initial Public Offer (IPO) will be an option to consider if it proves to be the best approach to unlocking value.

MTN Group’s plan comes just weeks after Airtel Africa, one of its major competitors in the African market, opened its capital to TPG Holdings and MasterCard which gave Mastercard a 3.75 stake in its business and valued it overall now at US$2.65 billion.

“With similar valuations to that of Airtel, our valuation would sit at about US$5 billion”

Ralph Mupita – CEO, MTN Group

The African arm of India’s Bharti Airtel Group managed to raise more than US$300 million with these two operations.

Through the opening of its MoMo business capital, MTN Group sees a way to raise expansion funds. Competition is growing on the continent, especially in the connectivity and financial services segment.

Strengthening its assets in this particular context will allow MTN Group to increase its financial strength and consolidate its position in the continent’s telecom markets.

Mobile money, where users store and manage cash in an account linked to a mobile phone, is one of the fastest-growing sources of income for wireless-network companies operating in sub-Saharan Africa, such as MTN and Vodafone Group-controlled Vodacom Group and Safaricom.

The region, which struggles with limited banking infrastructure, has more mobile-money accounts than anywhere else in the world, with about 548 million at the end of 2020, or 54% of all customers, according to the GSMA, the global industry group.

Safaricom, based in Nairobi, is the largest mobile-money provider in the region through its M-Pesa service.

Potential exists for further growth, with the two most-populous countries, Nigeria and Ethiopia, yet to roll out of the service.

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