Business - Companies
Updated: April 14, 2021

MTN Beats Airtel In Mobile Money Valuation, Plans IPO

By Oluwatosin Ogunjuyigbe
April 14, 2021
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MTN Group Ltd. is valuing its mobile money business, MoMo, at $5 billion, beating that of telecom rival Airtel as the company now eyes an initial public offering.

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

The South-African network is planning to separate its mobile money business from its core venture through public listing which will allow MoMo to raise funds and reduce the parent company's debt.

MTN Mobile Money has seen rapid growth across the 16 markets in which it operates. By the end of September 2020, nearly 42 million people were regularly transacting on MoMo, an increase of 4 million people from the first half of 2020.

MTN has about $3 billion net debt which will drop if the financial technology firm's IPO doesn't fall through. The company will sell a minority stake in the segment to reduce its financial liabilities.

READ ALSO: MTN Ditches Commercial Banks To Explore Fintech Alternatives

MTN is also aiming to raise cash with a sale and leaseback of most of the group’s mobile phone towers in South Africa by the end of the year, and it is exiting its troubled Middle East operations.

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.

With 60% of Nigeria’s 114 million adults unbanked, telcos have a natural advantage over banks in trying to reach the unbanked. The telcos use a simple model where users don’t need to install any apps or worry about any complex bank-like registrations.