MTN, a South African telecommunications company, intends to value its mobile money division at more than $5 billion.
The business is planning to sell or list a minority stake in order to attract more international investors looking to profit from fast-growing FinTech assets.
MTN currently has 280 million global subscribers, with almost 12 million new users joining its mobile money arm in 2020, bringing the number to over 46 million.
The unit should be worth at least $5 billion to $6 billion, according to company CEO Ralph Mupita.
He mentioned that the company will spin it out over the next year.
MTN is a Johannesburg-based company that announced the separation plan last month as part of a strategic change. The move would result in a $3 billion reduction in net debt.
The group hopes to capitalize on growing consumer interest in the mobile money market, which has been built up by African telecoms over the last decade and allows phone subscribers to send and receive money outside of banks while also selling ancillary services such as microinsurance.
MTN’s mobile money market has more than double the 21 million users of rival Airtel Africa, and the company’s financial services interests include an insurance joint venture of over 10 million customers.
MTN expects some regulatory oversight in Africa as a result of the change, as more sophisticated financial services owned entirely by cell phone companies.
MTN competitor Airtel Africa recently closed a $100 million deal that gave Mastercard a 3.75 percent stake in the company, valuing it at $2.65 billion.
The investment from Mastercard, according to Raghunath Mandava, CEO of Airtel Africa, would assist the company’s goal of targeting underserved regions with new financial resources.
The company’s current partnership with Mastercard was also bolstered by the investment, which included “extended commercial agreements” and a revised “commercial framework.”