MTN Nigeria has announced that MTN Group, its parent company based in South Africa, will acquire a 60 percent stake each in MoMo Payment Service Bank Limited (MoMo PSB) and Y’ello Digital Financial Services (YDFS) Limited.

MoMo is a payment service bank business that provides financial services, including deposits, payments, transfers and digital wallets to individuals and small businesses in Nigeria via digital and mobile‑based platforms.

Y’ello Digital is a licensed super-agent that provides agency banking and financial services, including cash deposits, withdrawals and bill payments.

YDFS operates through the MoMo network.

In an explanatory note in respect of the proposed transaction recently, MTN Nigeria said the transaction will cost N95.5 billion and reduce its exposure to the “loss-making” financial technology (fintech) companies.

According to the Nigerian subsidiary, the acquisition, which the South African company will conduct through another subsidiary, MTN Group Fintech, is a restructuring that consists of two phases.

The first phase is the acquisition of 60 percent stake each in the two fintech companies by MTN Group.

“MTN Group Fintech will acquire a 60% stake in each of the Fintech Companies through a combination of primary issuance of shares by the Fintech Companies and a secondary acquisition of shares in MoMo PSB from MTN Nigeria, at an agreed valuation of N95.5 billon (on an intra-group debt free and cash free basis), resulting in an implied capital injection of N152.06 billion payable in cash or consideration other than cash, or a combination (the “Investment Amount”) into the Fintech Companies. MTN Nigeria will retain a 40% stake in the Fintech Companies,” the statement reads.

According to the explanatory note, the second phase is the creation of a financial holding company named Fintech HoldCo — which will be 60 percent owned by MTN Group Fintech and 40 percent owned by MTN Nigeria.

The network provider said the transaction phase will be completed with Fintech HoldCo acquiring the shares held by MTN Group Fintech and MTN Nigeria in MoMo and Y’ello Digital.

“Subject to obtaining the approval of the CBN, Fintech HoldCo will become the 100% owner of the shares in the Fintech Companies, having acquired all the shares held respectively by MTN Group Fintech and MTN Nigeria in the Fintech Companies,” the telecommunications company said.

The telco said the proposed transaction distributes operational risks, allowing MTN Group Fintech to share future capital risks, such as losses, regulatory burdens and execution risks.

In August 2024, MTN Nigeria acquired a 7.17 percent stake held by Acxani Capital Limited in MoMo.

The acquisition increased MTN Nigeria’s total stake in MoMo to 100 percent.