Tuesday, May 18, 2021

MTN Group say struggle to repatriate R2 billion from Nigeria, a “near term issue”, eyes spin off its mobile money business

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This week, MTN announced a change of strategy – called “Ambition 2025” – which may see its MTN Mobile Money platform launch as a separate business.

MTN Mobile Money allows subscribers to send and receive money and make payments using electronic wallets on their phones, bypassing banks.

Last year, the number of active Mobile Money (MoMo) users increased by almost 12 million to 46.4 million in 15 countries. More than 12,000 transactions are processed every minute.

“R2.3 trillion in transactions went through our mobile money platform – and that’s without SA and Nigeria being material in that number,” MTN CEO Ralph Mupita told 702’s The Money Show on Wednesday evening.

“If we were a bank, we would be a very bank. We see a separation and carve out of our fintech business as something that we have to do.”

MTN also has an insurance joint venture, which had 11 million registered policy holders and 6 million active policies at the end of last year.

Mupita believes that the value of this business is currently underappreciated by the market.

“We need to reveal the value by structurally separating some of the key assets and platforms and make them standalone businesses over the medium term.” The company is now looking to work with financial services group to find “smart partnerships”.

MTN reported its results for last year this week – which showed a 52% increase in its headline profit, with a 12% rise in service revenue to R170 billion. Its number of subscribers increased by 28 million to 280 million across 21 markets.

But the company didn’t pay a final dividend for last year as it focussed on reducing its debt burden of R43 billion.

Also, MTN is worried about “cash upstreaming from Nigeria” – the company still needs to repatriate R4.2 billion from Nigeria, which it can’t due to challenges securing foreign currency in the market.

Mupita told The Money Show that this is a “near-term issue”, and that the recent gains in the oil price should provides a “glimmer of hope” that MTN will be able to move the money.

MTN is currently racing to verify its subscribers in Nigeria after the telecommunications regulator there imposed strict new rules, which could strip mobile operators of their licences.

He said that Nigeria remains a material part of the MTN Group, contributing 40% of its profit.

“This is not a trivial business.”

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