MTN, Africa's leading mobile telecommunications company, has unveiled a significant investment from global payments leader, Mastercard, amounting to $200 million in its fintech division. The announcement came through a statement released today, following the finalization of the investment agreements with Mastercard.

This strategic investment values MTN's Group Fintech at an impressive $5.2 billion, based on a cash and debt-free valuation. Mastercard will acquire a minority stake of approximately 3.8% in MTN's fintech operations with this investment.

The valuation of MTN's mobile money enterprise by Mastercard, at an enterprise value (EV) of $5.2 billion, represents a multiple of 16 times its trailing EBITDA. This is significantly higher than the valuation multiples seen in similar sectors, such as Airtel Africa's 10x.

This investment is expected to enhance MTN's valuation transparency and provide a financial boost. It could also improve the company's balance sheet by potentially replacing dividends from subsidiaries and mitigating the impact of increased capital spending in 2023 due to foreign exchange fluctuations.

MTN has previously disclosed plans to generate $1.3 billion through asset sales, including the recent sale and leaseback of its mobile towers in South Africa and plans to divest certain West African assets. Additionally, MTN Nigeria is looking to raise N52 billion through the issuance of commercial papers for recapitalization purposes.

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The partnership with Mastercard is seen as a significant step towards enhancing MTN's fintech offerings and expanding financial inclusion across Africa. MTN highlighted that this collaboration would bolster its payment and remittance services, with plans to seek further strategic partnerships and investments.

Ralph Mupita, chief executive officer of MTN Group Ltd.

The investment follows an initial announcement made on August 14, 2023, marking a milestone in the strategic partnership aimed at expanding MTN's fintech capabilities and reach. The transaction was completed six months after the first announcement, reflecting a strong valuation amidst challenging fundraising conditions for tech startups, particularly given that Mastercard will not hold a controlling interest.

MTN's fintech services, operating under the MTN Mobile Money (MoMo) brand, serve over 46 million customers across 21 markets in Africa and the Middle East. MoMo offers a range of services including money transfers, bill payments, airtime purchases, and access to insurance, loans, and savings products, along with online shopping capabilities.

The MTN and Mastercard partnership is poised to significantly enhance MTN's fintech solutions and market reach, leveraging Mastercard's global network and technology. This collaboration will provide MTN customers with access to Mastercard's innovative payment solutions, fostering greater participation in the global digital economy and unlocking new opportunities.