MTN Group Ltd., Africa’s biggest wireless carrier, said Mastercard Inc. agreed to take a minority stake in its financial-technology business, which the company values at $5.2 billion. Shares rose as much as 10%.
The deal will be structured in two parts, including a commercial agreement on payments and remittance that uses Mastercard’s technology infrastructure to expand in Africa and the investment into a minority stake,
The announcement comes as Africa’s young, tech-savvy population are increasingly using their mobile phones to bridge gaps in services including banking. That’s opened a lucrative and fast-growing space in the fintech sector for wireless carriers. Much of the investment to date has been in mobile-payment systems, with a wave of fast-growing startups such as Flutterwave Inc. and Interswitch Ltd. emerging.
MTN shares were up 9.4% to 141.42 rand at 10:43 a.m. in Johannesburg, the biggest intraday gain in a year. The valuation is strong given the fund-raising difficulties many technology startups are facing and the fact that Mastercard won’t receive a controlling stake, according to Peter Takaendesa, the head of equities at Mergence Investment Managers in Cape Town.
The memorandum of understanding with Mastercard values the fintech unit at $5.2 billion,
MTN rivals including Airtel Africa Plc, Nairobi-based Safaricom Plc and South Africa’s Vodacom Group Ltd. are all at various stages of transforming from basic voice and text mobile use to digitalization, with a broad aim of separating and monetizing the businesses in the longer term.