MTN Uganda announced plans on Wednesday to hold an extraordinary general meeting (EGM) on July 2 to discuss and vote on the proposed spinoff of its mobile money and fintech business, MTN MoMo, from its core telecoms operations.
Under the current structure, MTN Uganda – which is 76% owned by MTN International – owns 100% of MTN MoMo. Under the proposal, MTN Uganda will structurally separate MoMo from its telecoms business. The resulting spinoff company, MTN New Finco, will be 76% owned by MTN Group Fintech Holdings, with the rest held by a trust set up for MTN’s minority institutional and retail investors.
According to news site Kenyan Wall Street, MTN Uganda needs to separate MoMo from its telecoms business to comply with Uganda’s National Payment Systems Act 2020, which states that non-standalone payment service providers must establish a “subsidiary legal entity” for the service.
The act also prohibits telcos from using airtime as a substitute for money, the report said.
However, in a circular to shareholders, MTN Uganda said the move also aligns with MTN Group’s “Ambition 2025” strategy, a pillar of which is to “build valuable platforms” and “transform the MTN portfolio”.
That includes spinning off its payments services in Uganda, Ghana and Nigeria, which – in addition to satisfying regulatory requirments – will also enable its mobile money businesses to operate inependently and report their earnings via MTN Group Fintech, rather than on a consolidated basis under MTN Group. It will also encourage fintech-focused strategic partners to invest in MTN’s mobile money and fintech businesses, the circular said.
Last month, MTN Ghana (a.k.a. Scancom) spun off MoMo into a new entity called New FinCo, partly to comply with ownership rules that require electronic money issuers to have at least 30% Ghanaian ownership. MTN created a trust that will own a 32.13% stake in New FinCo on behalf of local minority shareholders to meet that requirement.
