In an effort to improve its standing in the financial services industry, MTN, the largest telecom company in Nigeria, paid N6.95 billion to acquire the remaining 7.17 percent minority stake in MoMo Payment Service Bank.
MTN acquires remaining stake in MoMo PSB to enhance digital banking in Nigeria
MTN, the largest telecom company in Nigeria, has paid N6.95 billion to acquire the remaining 7.17 percent minority stake in MoMo Payment Service Bank, bringing its ownership of the bank to full control.
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The acquisition, disclosed in MTN Nigeria’s unaudited financial statements for the nine months that ended on September 30, 2024, follows an agreement in May 2024 with Momo’s minority shareholders to sell their stakes.
The telecom operator said the acquisition was in tandem with its mission to improve its standing in the nation’s financial sector given that MoMo PSB provides a variety of digital banking services meant to promote financial inclusion.
MoMo PSB shares acquisition hopes to improve MTN’s revenue streams
Through the acquisition, MTN Nigeria hopes to increase revenue streams from the expanding digital finance market while utilising MoMo PSB’s mobile banking infrastructure to provide consumers with more convenience.
Following the dilution of MoMo PSB’s non-controlling interest to 7.17 per cent, minority shareholders agreed to sell off their stakes at N6.95 billion, an amount that the telco paid in full.
MTN Nigeria adjusted its retained earnings by N12.97 billion as a result of the acquisition, which was filed as an equity transaction.
This adjustment reflects the difference between the actual amount paid by MTN and the valuation of the non-controlling stake in MoMo PSB, in line with the International Financial Reporting Standards (IFRS) 10.
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MTN’s MoMo PSP seeks to operate POS terminals
MTN has applied for Payment Service Solutions Provider (PSSP) and Payment Terminal Service Provider (PTSP) licences for its fintech subsidiary MoMo PSB.
If approved, MoMo PSB could create financial solutions, offer merchant aggregation and collection services, and provide payment processing gateways if the PSSP licence is approved, which would allow MTN process its payments and lower the amount it now pays to other PSSPs.
MoMo PSB can handle merchants’ and partners’ payment processing requirements in addition to the telco company’s internal payment requirements.
With the PTSP licence, MoMo PSB will create POS apps, deploy and maintain POS terminals, and provide training and support to more than its 302,000 merchants, agents, and 5.3 million users.
With the licences, the MTN’s fintech division could rival well-known platforms like Flutterwave and Interswitch. It will also face competition from industry heavyweights Moniepoint, Opay, and Palmpay in the PoS sector.
According to the company’s Q3 2024 report, Yello Digital Financial Services (YDFS), MTN’s other fintech unit, applied for the licences and paid ₦200 million for them.
With a super-agent licence to enable bill payments and person-to-person transfers, MTN introduced YDFS in 2018. This licence does, however, limit YDFS’s ability to store client deposits in digital wallets.
MoMo officially began operations in Nigeria on May 19, 2022, after the Central Bank of Nigeria (CBN) approved its services in April 2022. It offers services like money transfers, bill payment, and the selling of data and airtime. However, MoMo PSB’s offerings are still restricted by the PSB licence; services like loans, foreign exchange transactions, and insurance underwriting are not included.
MoMo PSB reported 302,800 agents and merchants and 5.5 million active digital wallets by the end of Q2 2024.