After N62bn impairment, MTN Nigeria opts for partnership over full fintech ownership

MTN Nigeria is turning to a partnership model for its fintech business after recording a N62 billion impairment, opting to dilute ownership rather than continue bearing the full financial burden alone.

The company wants its parent, MTN Group, through MTN Group Fintech, to acquire a 60 percent stake in each of MoMo Payment Service Bank (MoMo PSB) and Y’ello Digital Financial Services (YDFS). MTN Nigeria will retain 40 percent in both. The agreed valuation for the transaction is N95.5 billion on a debt-free, cash-free basis, implying a capital injection of about N152.06 billion.

This move comes after MTN Nigeria recognised a N62.56 billion impairment on its investments in fintech subsidiaries in its 2025 audited financial statements. The impairment significantly reduced the carrying value of those investments.

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In an explanatory note prepared for shareholders, MTN Nigeria described the fintech units as currently loss-making, which is common at this stage of development. The proposed restructuring aims to reduce the Nigerian unit’s exposure while still allowing it to benefit from future growth.

“The Proposed Transaction allows MTN Group to provide this funding and restructure the ownership and operating model of the Fintech Subsidiaries to accelerate growth and to better capture emerging opportunities within the digital financial services market,” the explanatory note stated.

The deal will be executed in two phases. First, MTN Group Fintech will inject capital through a combination of primary share issuance and secondary purchase of some shares from MTN Nigeria.

In the second phase, both parties will transfer their stakes into a new Fintech HoldCo, which will be 60 percent owned by MTN Group Fintech and 40 percent by MTN Nigeria.

The structure is subject to regulatory approvals, including from the Central Bank of Nigeria (CBN).

MTN Nigeria’s board obtained an independent fairness opinion from KPMG, which concluded that the N95.5 billion valuation is fair and reasonable. It represents a 2.1 times premium to the fintech companies’ carrying value as of December 2025.

Benefits for the telecom business

The company expects several benefits. By sharing the funding burden, MTN Nigeria can redirect capital to its core telecommunications operations, strengthening its network, improving service quality, and supporting sustainable dividends.

“MTN Nigeria can redeploy capital to accelerate core connectivity and digital infrastructure growth, which will support the performance of its primary telecommunications business,” the note said.

The separation should also improve MTN Nigeria’s balance sheet and key financial ratios. The fintech losses will no longer be fully consolidated in MTN Nigeria’s results, potentially boosting EBITDA margin and free cash flow over the next three to five years. This is expected to strengthen or at least maintain the company’s dividend-paying capacity.

Additionally, MTN Nigeria will fall solely under the regulatory oversight of the Nigerian Communications Commission (NCC), removing overlap with CBN supervision and bringing greater operational clarity.

Minority shareholders in MTN Nigeria will see no change in their shareholding in the telecom company. They will continue to have indirect exposure to the fintech upside through the 40 percent stake that MTN Nigeria will hold in the new structure.

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Part of a broader African strategy

The move in Nigeria forms part of a group-wide effort. MTN is implementing similar structural separations of fintech businesses on a phased, country-by-country basis in markets including Ghana and Uganda. In Ghana, the separation of mobile money into a standalone fintech entity was recently completed.

MTN Group has set Ambition 2030, which positions Connectivity, Fintech, and Digital Infrastructure as its three main growth platforms. By creating dedicated fintech vehicles, the group aims to attract future strategic investors and partnerships more easily while giving the businesses focused management and funding.

The fintech subsidiaries are expected to focus on rural penetration, agent network expansion, merchant acquisition, digital payments, remittances, and broader financial inclusion in Nigeria.

Next steps

Shareholders will vote on the related-party transaction at MTN Nigeria’s Annual General Meeting scheduled for April 30, 2026. The meeting will be held virtually.If approved, the company aims to complete the transaction on or before December 31, 2026, subject to all necessary regulatory and legal approvals.

For now, the restructuring reflects a pragmatic approach: MTN Nigeria is prioritising capital discipline in its core telecom business while the parent group continues to back fintech growth at the holding level.