(Kampala) – Tensions are rising among shareholders of MTN Uganda as the company moves to spin off its highly profitable mobile money business into a separate financial technology (FinTech) company.
This restructuring plan, which will be voted on in an extraordinary general meeting scheduled for 2 July, has drawn sharp concern from retail investors worried about its potential impact on shareholder value and transparency.
The restructuring involves separating MTN Mobile Money from the listed telecom arm and placing it under a new entity referred to as MTN FinCo, aimed at attracting strategic investors and driving faster FinTech growth.
The unit has become a major source of revenue for MTN Uganda, accounting for UGX 982 billion in 2024, which was 31% of total revenues.
In the same year, the mobile money business recorded UGX 1.63 trillion in assets and UGX 260 billion in profits, distributing UGX 303 billion in dividends.
This represents 60% of the company’s total dividends, making the unit second only to Airtel Uganda in dividend payouts on the Uganda Securities Exchange (USE).
The plan to spin off the mobile money unit follows similar moves in the region, including Airtel’s decision to retain its mobile money business under Airtel Africa before its 2023 IPO. MTN has said the restructuring is designed to unlock growth potential by aligning with the Group’s FinTech strategy and tapping into international capital markets.
However, a group of shareholders lodged a formal complaint with the Capital Markets Authority (CMA) on 30 June. Represented by Reeve Advocates, the group issued a legal “caveat emptor” warning, citing concerns over ownership, risk exposure, and inadequate disclosure. They question whether retail investors will still benefit from mobile money revenues once the unit is moved under a trust, rather than being held directly.
According to MTN, minority shareholders will retain a 23.985% stake in the new FinCo through a trust structure based in Uganda. However, unlike institutional investors who will hold direct shares in the new entity, retail investors’ exposure will depend on their shareholding in the listed MTN Uganda stock.
Critics say this structure lacks clarity, with no detailed plan provided on how current or future liabilities of the mobile money unit will be managed. They argue that key information—such as the financial framework of the new company and the identity of trustees—remains vague and could compromise shareholder rights.
Minority investors have also expressed frustration over MTN’s communication strategy, describing it as technical and inaccessible to the average shareholder. They believe the company has a duty to provide clear, timely, and inclusive information to all shareholders, regardless of their education level.
Concerns have already reflected in the stock market. MTN Uganda’s share price, which rose to UGX 290 from the initial public offering (IPO) price of UGX 200 earlier in the year, has now declined to UGX 261.06 as of 30 June, wiping off UGX 600 million in market value.
MTN Group argues that the spin off is necessary to allow the FinTech unit to operate more flexibly and partner with international players like PayPal and Visa. Executives claim this will help drive long-term growth and innovation, despite the short-term anxieties.
Kenneth Legesi, CEO of Ortus Africa Capital, believes the move is strategic.
“Once mobile money is carved out, its value as an independent FinTech will become clearer. But it may take three to five years for retail investors to see the full benefits,” he said.
MTN had already separated mobile money operations under Uganda’s 2021 National Payment Systems Act. This new move would create a standalone company under a new reporting structure, no longer consolidated under MTN Uganda’s results.
The broader question now is whether Africa’s frontier capital markets can evolve to ensure retail investors share fairly in the continent’s booming digital economy.
For now, MTN Uganda must convince shareholders that they won’t be left holding only the infrastructure while growth profits shift elsewhere.
