MTN Uganda, under the leadership of Sylvia Mulinge, the Chief Executive Officer (CEO), has announced plans to structurally separate its mobile money and financial technology business, MTN MoMo, from its core telecommunications operations.
This move, according to the company’s Board of Directors, is expected to give MTN Uganda a competitive edge in the telecommunications industry by unlocking value, enhancing operational focus, and aligning with the company’s broader fintech strategy.
In a statement issued by Enid Edroma, the Company Secretary, “The Proposed Transaction, if approved, will result in MTN MoMo ceasing to be a subsidiary of MTN. The mobile money and financial technology business currently run by MTN will be operated by a new company following a company amalgamation, with the new company thereafter being owned by MTN Group Fintech Holdings B.V. and a trust whose beneficiaries will be the minority institutional and retail shareholders of MTN…”
Edroma notes, however, that this Proposed Transaction, which is being financially supported by Stanbic Bank Uganda, is subject to a number of conditions, including receipt of MTN shareholders’ approval, and all other required regulatory approvals and no-objections.
Important to note is that this is a very strategic decision by the MTN Group Board of directors that is bound to come with several benefits for the company, some of which include;
Increased Operational Focus
By separating its fintech business, MTN Uganda can focus on core telecommunications operations while allowing its fintech arm (MTN MoMo) to operate independently and make decisions that drive growth in the rapidly evolving digital finance sector.
Unlocking Value
The restructuring is expected to unlock value in MTN Uganda’s fintech business, which has been a significant contributor to the company’s revenue. With a valuation of US$5.2 billion, the fintech arm has tremendous growth potential.
Strategic Partnerships
The separation will also pave the way for strategic partnerships, such as the planned investment by Mastercard, which will accelerate growth in digital payments and remittances.
Improved Regulatory Compliance
The restructuring will enable clearer regulatory compliance as financial services evolve separately from core telecom infrastructure.
Competitive Advantage in the Industry
The restructuring will give MTN Uganda a competitive advantage in the telecommunications industry in several ways:
Increased Agility
The separated fintech business will be able to respond quickly to changing market conditions, allowing MTN Uganda to stay ahead of the competition.
Access to New Markets
The partnership with Mastercard will enable MTN Uganda to tap into new markets and customer segments, further expanding its reach and influence in the industry.
Enhanced Innovation
The restructuring will allow MTN Uganda’s fintech arm to focus on innovation and product development, driving growth and competitiveness in the industry.
MTN Uganda’s decision to structurally separate its mobile money and financial technology business from its core telecommunications operations is a strategic move that will give the company a competitive edge in the telecommunications industry.
By unlocking value, enhancing operational focus, and driving growth through strategic partnerships, MTN Uganda is well-positioned to thrive in the rapidly evolving digital finance sector.