MTN Nigeria mulls merger of Momo Payment Service Bank and Yello Digital Financial Services
Karl Toriola, CEO, MTN Nigeria


The entrance of the big mobile telecommunications companies into the financial services space is generating serious interest and discussions in the banking industry, Business Hallmark can reveal.

While some players in the industry believe the move would complement the banking services for efficiency, others fear that it may eat into their businesses and market share.
Whatever, may be the case experts are wont to believe the development might alter the shape of banks in terms volume of business,

competitiveness among other factors.
‘’The shape of banking or the financial services industry in Nigeria may be changing fast. This is more so when the MTN and Airtel are entering the banking arena for market share,’’ an analyst who did not want a mention of his name in print said.

Both big mobile telecoms firms appear in fact, to be the largest mobile telephone net-works in Africa at the moment. Before now, deposit money banks which have operated the brick and mortar banking system had dominated the financial institutions industry arena.

The term “brick-and-mortar” refers to a traditional street-side business that offers products and services to its customers face-to-face in an office or store that the business owns or rents. The local grocery store and the corner bank are examples of brick-and-mortar companies.

But that dominance is fast changing given the speed at which technology is growing with fintech pushing with innovations that make banking easier with unique experience.
‘’Globally, the financial services industry has come under intense competition from fintech firms- agile and innovative firms leveraging technology to deliver tailored financial service offerings to consumers and corporates.

‘’In Nigeria, investors are taking positions or stakes in the country’s growing tech ecosystem fueled by attractive fundamentals like the country’s youthful and tech savvy population, increasing smartphones and internet penetration, large unbanked population, among other factors. Between 2011 & 2018, fintech investments in Nigeria recorded more than US$200 million” said PWC (Price Water Coopers) in a report. Obviously, banking is being transformed on account of the increasing sophistication of technology.

Despite the fact that other fintechs are already dotting the financial services industry, the two biggest mobile networks have secured regulatory approval to operate as financial services bank. While active bank customers in Nigeria have grown from to about 73.2 million as at 2019, data shows financial inclusion stood at 64 per cent in 2020 even as CBN targets 80 per cent.

But the MTN subscriber base has hit 76.5million while Airtel boasts of 44.4million according to recent research findings. This an indication that MTN and Airtel may dominate the financial services space if they get their acts together. In fact analysts have divided opinion on the fate that may befall the banking industry given the licensing of the big mobile telecoms firms to play in the banking services arena.

While some experts opine that banking is beyond operating financial services or payment services and may not give MTN, Airtel among others the latitude to corner huge business for themselves in that arena, others believe that banking goes beyond what MTN can do.

Wikipedia says that a bank is a financial institution licensed to receive deposits and make loans. Banks may also provide financial services such as wealth management, currency exchange, and safe deposit boxes. Banks do all these and more as far as banking is concerned.There are several different kinds of banks including retail banks, commercial or corporate banks, and investment banks. In most countries, banks are regulated by the national government or central bank.
MTN and Airtel, experts say do not belong to this category of banks but its services would complement banking services. There is however, a consensus that telecoms dominates the back end of banking in these days of electronic banking.

In his comment, Managing Director, High Cap Securities limited, David Adonri reckons that MTN and other telecoms companies venturing into the banking space would have implications for the banking industry.

Adonri observed that the possibility of MTN dominating the financial services space is not far fetched given the fact that banking as at today is heavily technology driven.

“And MTN has technology which gives it a competitive edge. You know banking now is moving from brick and mortar world to the virtual space and MTN controls the virtual channels. Even the current banks which now use the virtual channels now are not the owners of the backbone. They are only renting the back bone to do their business. We are now talking about the real owner of the back bone itself taking over its activities.

‘’So it will make a very big impact or influence on the banking industry. Look at money transfer, a lot of the banks unfortunately don’t have the back end technology to do money transfer.

My personal experience was that I could not access the money sent to me from America in October through a money transfer platform called Send Wave from any of the banks because of technology deficiency. This tells you that the technology companies are moving in to dominate the banking landscape’’.

In his view, Dr. Boniface Chizea of Chief Executive Officer, BIC Consultancy Services believes that MTN can only play in the financial industry based on what the regulatory authority permits.

“We are going to start from what type of financial services MTN is going to render. In the first place, MTN is not carved out to do banking. Except it is going to begin to do that by carving out shops to do that. At best it is probably going to engage in deposit taking, some form of payment services, honoring cheques and so on. But Banking is a lot more than that.

“I have not read the MTN mandate but we know the CBN target is financial inclusion. This may be one of the strategies to achieve that. I think the role of MTN playing in the financial services arena is to achieve that purpose and other interest of the government in her pursuit to achieve economic growth’’

“Mobile Money is the next growth frontier for the telecoms industry: We understand that the recent approval from the apex bank will enable MTNN to put in place the necessary infrastructure to offer banking services such as acceptance of deposits, remittances, payment processing and mobile wallets. However, it is instructive to note that the AIP implies a six-month waiting period after which final approval will be given, provided all regulatory requirements are met. As things stand, it is difficult to reliably estimate the potential contribution of the PSB subsidiary to revenue, EBITDA and Free Cash Flow (FCF)” said analysts at Cordros Research

Chairman of Zenith Bank International, Mr.Jim Ovia had stated that with an operational FINTECH system in place, there would be more inclusiveness of all and sundry in the economy; transactions and payments will be done efficiently and transparently; one may not necessarily need a banking license to establish how payment systems are done – a rare opportunity to digitize the economy. He explained that contrary to popular assumptions, FINTECH is not a threat to the banking institutions but rather a strategic partnership to better serve the needs of customers.

MTN’s venture into the financial service space will bring all these to reality. Its number of subscribers and that of Airtel which range from 140 million is a great advantage.


On current footing, MTN Nigeria grew its profit before tax by 51.9 per cent to N321.35billion in nine months of 2021 from N211.59billion in nine months of 2020, to become the second most profitable company on the NGX.

CEO, MTN Nigeria, Mr. Karl Toriola said the telecommunications giant in the first nine months of 2021, continued to enhance its resilience of the business, improve performance and make good progress towards Ambition 2025 strategy. “Overall, service revenue continues to grow, increasing by 23.7 per cent, ahead of the rate of inflation and supported by voice revenue growth of 10.6per cent and accelerated data revenue growth of “In addition, our focus on cost management through our expense efficiency programme, combined with service revenue growth, led to a 1.6pp EBITDA margin expansion to 52.6 per cent and translated into an increase of 51.9 per cent in PBT.”, he said.

For the first half of the year, ended June 30, 2021, MTN service revenue hit N790.3 billion, an increase of 24.1 per cent.

The telco’s profit before tax (PBT) of N215.1 billion and profit after tax (PAT) of N141.8 billion in its half-year (H1) operations. The financial report showed pre-tax profit growth of N215 billion, representing a 54.1 per cent increase, while profit for the period soared by 49.5 per cent to N141.827 billion.

The company recorded a profit before tax of ₦298 billion, making it Nigeria’s biggest telecoms player as the company added 12.2 million subscribers.

Research revealed that its subscriber base hit 76.5 million active users, which is miles ahead of Airtel for instance, which said in February that it has 44.4million subscribers. MTN’s active data users also increased by 7.4 million which brings its total number of active data users to 32.6 million.

MTN’s Fintech revenue rose by 23,9%. The number of active Mobile Money (MoMo) users increased by 11,7 million to 46,4 million, generating a monthly ARPU of $1,2. The value of MoMo transactions was US$152 billion and we processed 12 400 transactions per minute (up 35% from 9 200 in 2019). While COVID-19 accelerated the adoption of mobile financial services, growth in fintech revenue was moderated by reductions in transaction fees to support our customers, lockdown restrictions on agents and a slowdown in economic activity.

Meanwhile, the MTN Group has embarked on the public sale of shares in Nigeria in the Month of November 2021. The company is set to raise $246million (N101bn) through offering 575 million shares to the public.

In a statement the group noted it was the “first step in our previously communicated statement of intent to sell down approximately 14 per cent of MTN Group’s current shareholding in MTN Nigeria.”

“Today we announce our intention to proceed with a public offer for sale of up to 575 million shares in MTN Nigeria, by way of a bookbuild to institutional investors and fixed price to retail investors,” the company said in a notice filed with the Nigerian Stock Exchange.

“The offer is anticipated to open in November 2021 with a bookbuild to institutional investors, after which a fixed price is expected to be announced for retail investors also in November 2021. The offer is expected to close in December 2021.”
That will see its holdings in MTNN reduce from 76% to 62%.

If the company achieves this it would have met its target of selling more than 30 per cent of its stake to retail investors , an amount higher than the statutory minimum floatation of listing companies on NSE.

Hours after the announcement, the stock rose around 8% to ₦191 from N175.60.
MTN had shelved its plans to raise $500million in 2018 before it listed by introduction two years ago. The company had said the macro-economic conditions were not conducive for such a venture at the time.


Many are wont to believe that MTN has all it takes to raise the huge amount it is looking for as well as have its shares fully subscribed. The company which listed on the exchange only two years ago has proved to be strong, with strong fundamentals.

A giant company with huge muscles and the largest subscriber in the telecoms industry; many want to share in the successes of the company by becoming part owner. Experts also reckon that the market has been more bullish than bearish this year.

Not deterred by other challenges, the equities market which gained over 50per cent at the end of business year 2020 and is still looking impressive in the third quarter 2021. As at Friday October 29, 2021 the All share index closed higher by 0.2 per cent to 42,049.35 from 41,961.14 points on Thursday October 28,2021. In the last five months the market has appreciated 12per cent and more companies are recording good results than in 2020.

Whereas analysts seem divided on the fundamentals of the market but they posited that various reasons responsible for the bullish disposition of the market. But majority of them believe that any time the price of crude rises as the case presently that crude price is $80pbd and above investors in Nigeria become hopeful and encouraged. Others have also pointed that the fact that the economy was recording growth no matter how small could be enough encouragement to invest in the market. There is also a consensus that the Nigerian market is always attractive given that stock prices are cheap compared with stocks in the developed economies.

Interestingly, the market appears to be garnering momentum again given impressive results that are trickling in from companies in the second quarter 2021. Most banks and other firms are also paying good interim dividends in the period ended June 31, 2021. Evidently, the reading is that MTN will ride on this to sell its shares. But is it that simple? And how much would its new status as a banking sector player fit into this equation? We wait.

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