MTN shareholders brace for showdown over fintech spin-off at Accra EGM: Ghana, Uganda, Nigeria units at risk of value erosion
This is ahead of a contentious EGM in Accra scheduled for Tuesday, May 21, for Ghanaian shareholders of the local company, Scancom Ltd
MTN Group’s plan to spin off its lucrative mobile money (MoMo) divisions in Ghana, Uganda, and Nigeria has triggered alarm among shareholders of its subsidiaries, including Ghana’s Scancom PLC (MTN Ghana).
This is ahead of a contentious Extraordinary General Meeting (EGM) in Accra scheduled for Wednesday, May 21, for Ghanaian shareholders of the local company, Scancom Ltd.
The move, tied to a $200 million minority stake sale to Mastercard, risks diluting shareholder value in markets where fintech is growing rapidly and positively impacting profits and shareholder dividends, particularly in GhanaThe announcement of the spin-off was made by MTN CEO Ralph Mupita during an interview with Bloomberg on Monday.
The spin-off process is part of MTN’s broader strategy to streamline its operations and focus on its core telecommunications and fintech businesses.
The spin-off processes are more advanced in Uganda and Ghana, as the EGM in Accra indicates. Notices to Ghanaian shareholders were received Friday.
“Nigeria has a bit more complexity with some more regulatory processes to work through,” said Mupita. Despite these challenges, MTN remains committed to completing the reorganisation across all three markets, underscoring its dedication to driving innovation and growth in its fintech operations.
Why shareholders are nervous
MTN Ghana’s 2024 financial statements reveal that its MoMo business contributed over 45% of Scancom’s total profits, with year-on-year growth exceeding 30%.
Similar trends are reported in Uganda and Nigeria, where mobile money adoption has surged among Africa’s underbanked population.
Unclear compensation for shareholders
MTN Group has yet to clarify how shareholders in its listed subsidiaries (e.g., Scancom Ghana) will be compensated for the loss of a high-growth asset. Critics argue spinning off MoMo could leave parent companies as “shells” reliant on slower-growing telecom services.
Mastercard’s Stake vs. Local Ownership
Mastercard’s $200 million investment values MTN’s African fintech units at 55.2 billion, but shareholders fear the spin-off structure will divert future profits away from existing equity holders. “We’re being asked to surrender the golden goose without guarantees,” said a Ghanaian institutional investor, speaking anonymously.
The Ghanaian Flashpoint
In Ghana, where MTN MoMo processed GHS120 billion in transactions in 2023, (35% growth YoY), the fintech arm’s separation threatens to strip Scancom PLC of its most dynamic revenue stream.
Shareholders are expected to demand transparent valuation metrics for the MoMo business, commensurate stakes in the new fintech entity or dividend guarantees. They also intend to demand legal safeguards against erosion of Scancom’s market value post-spin-off.
MTN Group CEO Ralph Mupita acknowledged tensions, telling Bloomberg: “We’re committed to fair outcomes… but regulatory and structural complexities differ by market.”
Regional Divergence: Uganda ahead, Nigeria Lags
The spin-off process is most advanced, with regulators already engaged in Uganda. The story is not the same in Nigeria, where regulatory hurdles and Central Bank scrutiny over fintech control have slowed progress.
Here in Ghana, the National Communications Authority (NCA) and the Bank of Ghana are closely monitoring the process amid concerns about foreign dominance in fintech.
What to Expect at the EGM
At Wednesday’s meeting at the Accra International Conference, MTN Group faces tough questions:
– Will shareholders in subsidiary markets (e.g., Ghana) receive proportional stakes in the new fintech entity?
– How will MTN insulate listed subsidiaries from post-spin-off revenue shocks?
– What safeguards exist to prevent Mastercard from exerting outsized influence?
One security analyst in Accra close to the transaction warned: “If MTN fails to address compensation clearly, litigation and shareholder revolts are inevitable. Ghana’s capital markets cannot absorb another corporate governance scandal.”
Broader Implications for African Markets
MTN’s strategy reflects a continent-wide pivot by telecom giants to monetise fintech, which has outpaced traditional voice and data revenue. However, the spin-off model—favoured by global investors—often sidelines local shareholders. In 2022, Airtel Africa faced similar backlash when it hived off its mobile money unit.
A Test of Corporate Governance”
Corporate governance advocate in a leading law firm in Accra told told Asaase News: “MTN must balance global partnerships with fiduciary duty to local shareholders. Spin-offs shouldn’t become a wealth transfer from Accra to Johannesburg or Africa to Wall Street.”
What’s Next?
The EGM on May 21 will likely see heated debate, with Ghanaian shareholders threatening to veto the proposal without concessions. However, a legal expert hinted that shareholders’ rights may be limited as this is a group management decision which might not need shareholders’ approval.
“But, it does not stop the matter being tested in court,” the source added.
Regulatory bodies in Ghana and Nigeria may intervene if investor protections are deemed inadequate.
US-based Mastercard’s final stake size and valuation terms will set a precedent for future foreign investments in African fintech, particularly at a time that the African Continental Free Trade area has become the first economic bloc to come out with a digital trade protocol and fintec business has become the fastest growing area in Africa’s 1.5 billion consumer-based economy.
Asaase News will monitor developments and provide live updates from the EGM. Money services started in July 2009. As at December 2024, there were approximately 17.2 million active users of MTN Mobile Money platform, alongside 22 partner banks.
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