MTN Nigeria is restructuring its way out of a fintech headache, handing majority control of two loss-making subsidiaries to its South African parent in a deal that redraws the ownership map of Nigeria's mobile money sector.
MTN Nigeria has announced that MTN Group, its parent company, will acquire a 60% stake each in MoMo Payment Service Bank Limited (MoMo PSB) and Y'ello Digital Financial Services (YDFS) Limited. MoMo PSB provides financial services, including deposits, payments, transfers, and digital wallets to individuals and small businesses via digital and mobile-based platforms, while Y'ello Digital is a licensed super-agent providing agency banking and financial services, including cash deposits, withdrawals, and bill payments operating through the MoMo network.
The deal is based on an agreed valuation of ₦95.5 billion on a debt-free, cash-free basis, implying a capital injection of approximately ₦152.06 billion into the two businesses. MTN Nigeria will retain the remaining 40% stake.
MTN Nigeria said the transaction is aimed at reducing its exposure to the loss-making fintech ventures and will be executed by MTN Group Fintech, a subsidiary of MTN Group, unfolding in two phases. Under the first phase, MTN Group Fintech will acquire the 60% equity in both companies through a combination of primary issuance of new shares and a secondary acquisition of existing MoMo PSB shares from MTN Nigeria.
The second phase involves the creation of a financial holding company, Fintech HoldCo, which will be jointly owned, with MTN Group Fintech holding 60% and MTN Nigeria retaining 40%. Fintech HoldCo will ultimately acquire the shares held by both parties in MoMo and Y'ello Digital.
The transaction marks a strategic reversal of sorts. The development follows MTN Nigeria's August 2024 acquisition of a 7.17% stake in MoMo from Acxani Capital Limited, a move that brought its ownership of the payment service bank to 100% just months before this planned restructuring now dilutes that ownership back to 40%.
The logic behind the reversal is financial discipline. MTN Nigeria has absorbed consistent losses from its fintech operations while its core telecoms business faces pressure from Nigeria's macroeconomic environment, including currency depreciation and high inflation. Offloading majority control to a better-capitalised parent entity with deeper fintech expertise and global networks transfers both the risk and the burden of turning these businesses around.
For MoMo PSB, which competes in a mobile money market increasingly dominated by bank-led fintechs and super-apps, the ₦152.06 billion implied capital injection could be the fuel needed to achieve scale. Whether MTN Group Fintech's involvement accelerates that trajectory or simply defers Nigeria's mobile money reckoning remains the question the market will be watching closely.
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