MTN Considering An IPO By Listing Mobile Money Division

MTN Group Ltd. values its mobile-money arm at about $5 billion and is looking to sell a minority stake in a bid to draw international investors who cannot look away from fast-growing fintech assets. The South African giant will consider a listing of the division, joining African wireless carriers trying to monetise a service that is particularly popular on the continent.

MTN Mobile Money is a secure electronic service that enables MTN Mobile Money wallet holders to store funds, send and receive money, make payments and do a number of other transactions simply using their mobile phone. It’s fast, simple, convenient and affordable. It is offered by MTN in partnership with over 10 partner banks, in a number of countries across Africa.

This move comes after Mastercard Inc. and TPG Holdings LP invested $300 million in Airtel Africa Plc’s mobile-money business at a $2.65 billion value.

“With similar valuations to that of Airtel, our valuation would sit at 75 billion rands, or about $5 billion,” said MTN Chief Executive Officer Ralph Mupita. “No decision has been made as yet, but the listing will be an option considered if that will be the best approach to unlock value.”

MTN’s rival Airtel Africa recently sold minority stakes in its mobile money business, valuing it at more than $2.6bn excluding cash and debt.

Johannesburg-listed MTN has previously said it was looking to spin off its entire fintech business, which includes mobile money. That has been valued by Nedbank Group Ltd. at $6 billion, according to a March 26 note, adding the process could take as much as a year.

The move also anticipates growing regulatory scrutiny in Africa of increasingly complex financial services being wholly owned by mobile phone companies, “In the discussions, we have had with regulators, they welcome this” Mupita said.

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 Plc- controlled Vodacom Group Ltd. and Safaricom Ltd.

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.