MTN is Africa’s biggest mobile company by subscribers.

Mastercard (NYSE: MA) is set to acquire a minority stake in the financial technology division of MTN (JSE: MTN), South Africa’s largest mobile company, which focuses on payments and remittances. The valuation of this division is over $5 billion. The investment is expected to be finalized soon and is seen as a significant step in MTN’s fintech services expansion.

This move comes as MTN aims to capitalize on the growth of mobile money networks in Africa, while global investors are increasingly attracted to fintech assets in the region. The announcement boosted MTN’s stock price by 7%. The specific stake size and investment amount by Mastercard remain undisclosed. (FT)

Mastercard had previously invested $100 million in Airtel Africa’s mobile money business, valuing it at $2.6 billion in 2021. The MTN fintech unit has the potential to achieve an EBITDA margin of over 30% based on standalone figures.

In the six months to the end of June, transactions on MTN’s mobile money platform saw significant growth, reaching $135 billion in total value. However, user numbers remained steady, except in Nigeria due to currency volatility. MTN’s total subscribers grew by 3.6%, while earnings per share increased by 7% to 542 rand cents.

The company is addressing currency weakness and potential risks in its major markets. In 2021, MTN had revealed plans to seek a minority investment or listing for its fintech unit with a valuation exceeding $5 billion.

The company is also selling other assets to bolster its finances.

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