MTN, the largest mobile operator in Africa by market size said it will create a Fintech spinoff targeting over 100 million customers by the end of 2025.
Chief Financial Officer, MTN Group, Tsholofelo Molefe told investors a virtual Capital Markets Day that MTN expects fintech service revenue contribution to rise from 8% to 20% in 2025, with mobile money subscribers seen rising to 100 million from the current 46.6 million.
The Capital Markets Day follows the annual financial results announcement released on the Johannesburg Stock Exchange (JSE) on 10 March 2021, where MTN introduced its revised strategy – ‘Ambition 2025.
MTN Group President/CEO, Ralph Mupita, Mupita announced the company’s Ambition 2025 strategy, which focuses on driving growth, faster de-leveraging of the holding company balance sheet, and unlocking the value of the group’s assets and platforms.
Speaking at the CMD, Mupita said; “We are excited about hosting this virtual CMD, and providing investors and other stakeholders with more insight into our Ambition 2025 strategy. We are very focused on driving growth, faster de-leveraging of the Holdco balance sheet and unlocking value inherent in our infrastructure assets and platforms”.
Outlining the strategy, Mupita said the structural separation of the fintech and fibre units is key to the plan, and progress has since been made to spin-off the two entities. “We are already a big business and what we are observing is that these businesses have their own unique financial and operational risk profiles to a traditional telco.
“So we are saying we need these businesses strategically to be much more focused. We will be leveraging the assets and capabilities of the traditional telco business and providing an ability to accelerate and grow.”
Mupita said the telco has in recent months recorded increased uptake of its fintech business, signalling future growth, an opportunity MTN will be pursuing in the near future. This growth and anticipated regulatory changes were motivation behind a standalone fintech business, he noted.
“We are also saying we don’t have the skills to run fintech businesses; what we should be doing is thinking of partnerships. Partners can bring us both skills and probably a bit of capital. We will still want to maintain majority control of these businesses. We will complete the structural separation by end-Q1 2022.”
The separation, he said, will also place the company on the correct regulatory path, as it anticipates that legislation in some countries will in future require spinning off fintech units.