MTN Group Ltd’s shares surged in Johannesburg after the wireless carrier edged closer to gaining a lucrative mobile-money license in Nigeria, more than two years after submitting an application to the authorities.
The continent’s largest telecommunications company jumped as much as 19% and was up 10% at 3:35 p.m. local time, the highest since 2015. The stock is the year’s best performer on the Bloomberg World Telecommunications Index.
The Central Bank of Nigeria granted conditional approval to MTN Nigeria Communications Plc and smaller rival Airtel Africa Plc to operate mobile banking in Africa’s most populous nation. That means they can submit applications to the regulator for a final license that will enable them to accept deposits, offer remittance services, and issue electronic purses, according to regulatory guidelines.
Airtel climbed 11% to 121.10 pence by 1:35 p.m. in London, the highest on a closing basis since its 2019 initial public offering.
“Finally it is here and it is going to be very impactful just because of the sheer reach of the telecom companies,” Ebitonye Atte, research analyst at Lagos-based United Capital, said by phone. The move will improve financial inclusion in a country where more than a third of adults lack access to banking services, he said.
MTN, Airtel Africa and others 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. Nigeria and Ethiopia are two major markets yet to finalize regulatory approval for the 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,” John Davies, an analyst at Bloomberg Intelligence, said in a note. “Mobile money can make up as much as one-third of sales in some markets.”
The telecom operators will have to compete with traditional banks that are investing in online payment services to offset economic woes, which have led to an increase in loan defaults by clients. Nigerian banks enjoy a dominance of their home turf as they are largely protected by regulators from foreign competition.
Nigeria has also become a hotbed for home-grown online payment companies, with Flutterwave Inc. and Interswitch Ltd. among startups to have achieved so-called unicorn status, or a valuation above $1 billion.
MTN values its mobile-money arm at about $5 billion and will consider a listing of the division, Chief Executive Officer Ralph Mupita said last year.