South Africa's MTN to sell mobile money stake to Mastercard

Stake sale values MTN's fintech arm at $5.2 bln

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Deal to help MTN expand, grow profits of fintech

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Shares up almost 10%, interim profit up by 7%

JOHANNESBURG, Aug 14 (Reuters) - South Africa's MTN has agreed to sell a minority stake in its mobile money arm to payments giant Mastercard, it said on Monday, in a bid to expand its African fintech business.

The telecoms group has since the COVID-19 crisis been trying to sharpen its focus on Africa and expand businesses such as payments, messaging, e-commerce and cloud computing to capture growth and counter Vodacom's growing regional presence.

For Mastercard, the deal will help deepen its presence on the continent in digital payments, which is viewed as a high margin, low capex and fast-growing business.

MTN has invested heavily in financial technology, cut back its exposure to the Middle East region and has managed to grow its market value by almost 5 times since the March 2020 crash.

Shares in MTN rose by almost 10% in early trade on Monday after it announced the deal with Mastercard, which values its fintech arm at $5.2 billion, around 40% of MTN's market value.

MTN CEO Ralph Mupita told investors during a conference call that the value and size of the stake being sold would be disclosed after final agreements are signed.

He said MTN had also signed separate commercial agreements with Mastercard to grow its payments and remittance services and for "building a broader remittance capability".

MTN's fintech arm has 16 different mobile money businesses and includes services such as its mobile money platform MoMo, insurance, airtime lending and e-commerce.

MTN would continue to scout for opportunities to sell up to 30% of the business, which contributes almost a fifth of its total revenues, Mupita said.

In 2021, U.S.-based Mastercard said it would invest 100 million dollars in Airtel Africa's mobile money operations, and currently has partnerships with companies in Ethiopia, Angola, Kenya among others.

Mastercard said the agreements with MTN would "add to the continued development of technology and infrastructure to drive financial inclusion across the African continent."

MTN also posted a 7.1% rise in half-year earnings. (Reporting by Tannur Anders; Editing by Promit Mukherjee and Alexander Smith)