MTN Nigeria was the most traded stock by value on the Nigerian Exchange Group on Monday after the telco said it had obtained a final approval from the Central Bank to operate a Payment Service Bank (PSB).
Some 4.9 million units of MTN Nigeria valued at N1.03 billion were traded on the day, the most of any listed company. GTCO and Zenith were the second and third most traded stocks by value at N994 million and N740 million respectively.
MTN’s share price gained 1.21 percent, the most in a week, to close at N208.5, according to NGX data.
The approval to operate a payment service bank, which has been two years in the waiting for MTN, gives the telco the license to provide all the services of a conventional commercial bank other than lending and processing foreign exchange transactions.
Analysts say the payment service bank opens a new income line for Nigeria’s largest company by revenues and investors want a piece of an exciting future. They expect the shares of the telco to rise even further in coming days.
“The mobile money service will be value accretive for MTN Nigeria because it means beyond voice and data, they can leverage on it to generate more revenue,” Yinka Ademuwagun, an investment management analyst at ValuAlliance Asset Management said.
“The approval is also a big win for financial inclusion as Nigerians without bank accounts can have access to some financial services with their phone lines,” the investment banker said.
The date of commencement of the bank which will be known as MoMo Payment Service Bank Limited has not been disclosed.
MTN Nigeria which got preliminary approval last November, as well as Airtel Africa, to operate a payment service bank, will be looking to tap Nigeria’s unbanked adult population of 38 million people.
The central bank had in 2019 granted approvals to Hope PSB, Money Master PSB and 9PSB.
Even though the PSBs are expected by the CBN guidelines to operate mostly in the rural areas and unbanked locations, targeting financially excluded persons, with not less than 25 percent financial service touchpoints in such rural areas, the operators’ participation in the industry is expected to bring huge competition to the existing traditional banks.
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Having the largest share of the market with 70 million subscribers, MTN Nigeria is expected to rake in the biggest share of the revenue of the telcos that have obtained the PSB license.
Lagos-based Tellimer forecasts that MTN Nigeria could add N131 billion in revenues using an assumption that it has a mobile money penetration rate of 30 percent among its existing customers.
In its full-year 2021 report, MTN said it now has over 57 million mobile money users in Africa, putting the telco ahead of closest rival Safaricom which has 52 million users as of March 2022.
The telco said it has seen fintech revenue growth of $1 billion representing a 30 percent increase year-on-year.
The number of active MoMo users rose to 56.8 million as at December 2021 from 10.4 million as at December 2020, generating a monthly average revenue per user (ARPU) of $1.3 billion.
The value of MoMo transactions went up by 56.8 percent to $239.4 billion and 10 billion transactions were processed, up 41.1 percent year-on-year. On the other hand, Safaricom’s MPesa recorded $192.9 billion in value of transactions and 11.6 billion transaction volume.
In 2018, MTN disclosed its ambition to become the largest digital banking platform in Africa by growing its mobile money vertical into a 60 million customer business.
“We will be the largest bank in Africa, leveraging scale, network, brand, infrastructure, and distribution,” Rub Shuter, the then MTN Group CEO had said in an interview.
The Nigeria banking license will help MTN to further consolidate that ambition.
