MTN Group’s shares reportedly surged in Johannesburg after the African telecom giant moved a step closer to getting a license to operate lucrative mobile money services in Nigeria.
Africa’s largest wireless carrier jumped as much as 19% and was up 13.7% at 11am on Friday, the highest since 2015. The stock is the year’s best performer on Bloomberg World Telecommunications Index, according to Reuters.
MTN Nigeria received an in-principal approval from the Central Bank of Nigeria (CBN) and will now work towards gaining final consent, according to a statement on Friday.
Airtel Nigeria also got a similar in-principle approval from CBN.
Meanwhile, elsewhere on the continent, Airtel Africa and other telcos are expanding aggressively in mobile payment offerings to take advantage of falling data costs and tap hundreds of millions of potential customers who don’t have access to banking services.
In Ghana, for instance, MTN is, by far, the mobile money market leader with an overwhelming market share. The last time, its market share was stated as more than 75%, and recently, the sector minister announced MTN alone accounted for 1.085 billion plus mobile money transactions in Q3 this year, and that is more than 85% share of total transactions for the period.
Nigeria and Ethiopia are two major markets yet to finalize regulatory approval for the mobile money services, though both have indicated a desire to do so.
The news “could add a new leg to growth for MTN and Airtel Africa — having waited years for full licenses in their biggest market by revenue — with both companies ready to launch mature technologies and processes”, John Davies, an analyst at Bloomberg Intelligence, said in a note. “Mobile money can make up as much as a third of sales in some markets.”
Nigeria has become a hotbed for homegrown online payment companies, with Flutterwave and Interswitch among start-ups to have achieved so-called unicorn status, or a valuation above US$1-billion.
Meanwhile, the Nigeria Central Bank recently launched its first digital currency, eNaira, which will need to run on the back of digital wallets to trigger adoption and usage. So the decision to issue mobile money licenses now is a strategic one designed to facilitate ease of use for the eNaira, in a bid to completely weed out cryptocurrency from that country.
MTN values its mobile money arm at about $5-billion and will consider a listing of the division, CEO Ralph Mupita said last year.
