MTN Nigeria has successfully completed the acquisition of MoMo Payment Service Bank (MoMo PSB) This strategic move aims to streamline and fortify the operations of the fintech entity.
Transition to Full Ownership
With this transaction, MoMo PSB has transitioned to become a fully owned subsidiary of MTN Nigeria. Before the acquisition, MTN Nigeria held 80% of MoMo PSB, while Acxani Capital owned the remaining 20% share. In May 2024, Acxani Capital expressed its intention to sell its entire 20% stake, which was subsequently reduced to 7.17%.
Financial Details of the Acquisition
The agreed purchase price for the 7.17% stake was ₦6.95 billion. This acquisition reduced MTN Nigeria’s “Other Reserves” by ₦12.97 billion. The comprehensive cost incurred by MTN Nigeria for this acquisition amounted to ₦16.35 billion, including ₦6.95 billion paid to Acxani Capital and an additional investment of ₦9.4 billion in MoMo PSB. The deal also included the acquisition of assets from Acxani Capital valued at ₦3.38 billion.
Growth and Performance of MoMo PSB
MoMo PSB, granted its operational license by the Central Bank of Nigeria (CBN) in 2022, has shown promising growth in its financial performance. For the half-year period ending June 30, 2024, the fintech reported revenue of ₦48.6 billion, an 11% increase compared to ₦43.6 billion in the same period in 2023.
The growth of MoMo PSB in early 2024 can be attributed to the success of its airtime lending product, Xtratime, and the increased adoption of its mobile money services. The number of active MoMo PSB wallets increased by 73.9%, reaching 5.5 million by the end of Q2 2024, up by 701,000 wallets from Q1. The network of MoMo PSB agents expanded by approximately 498,000 agents, bringing the total to 239,000, contributing to a 33.4% year-on-year increase in transaction volume.
Challenges and Liabilities
Despite positive trends, MoMo PSB saw a significant decrease in cash held on behalf of customers, dropping by 72% to ₦2.15 billion from ₦7.6 billion at the end of 2023. Additionally, MoMo PSB reported a liability of approximately ₦26.6 billion to MTN Nigeria by the end of H1 2024, with payments totaling ₦11.2 billion made to MTN Nigeria during the same period.
Mastercard’s Strategic Investment
In February 2024, Mastercard made a significant investment in MTN Group’s fintech division, acquiring a 3.8% minority stake for $200 million (₦3.8 billion). This investment underscores Mastercard’s growing interest and confidence in the potential of MTN’s fintech operations. The move aligns with Mastercard’s broader strategy to expand its footprint in the digital payments space, particularly in emerging markets where mobile money services are rapidly gaining traction.
The acquisition of the minority stake in MoMo PSB by MTN Nigeria and the strategic investment by Mastercard in MTN Group’s fintech division highlight the dynamic growth and potential within the mobile financial services sector in Nigeria. These developments are expected to further strengthen and expand the reach of mobile money services in the region.