Is MTN Recruiting Bankers Because It Wants To Buy Barclays Africa?

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Written by Dana Sanchez

MTN making a bid to buy Barclays Africa assets might sound far-fetched and ridiculous – but an MTN bank with operations in 14 African countries including Nigeria, Ghana and Egypt would shake up both the cellular and financial services industries, says Gugu Lourie, founder of South African tech website TechFinancial.

If this happens, it will put mobile operator MTN miles ahead of its new rivals, Lourie said.

The convergence of banking and cellular solutions isn’t new. The cellphone already functions as a virtual bank in Africa, one of the largest areas of unbanked and under-banked people in the world.

MTN played a big role in ensuring that those excluded from banking in Africa have access to cash or credit equivalents. This would make a bid for Barclays Africa a compelling opportunity, Lourie said.

Building its own fintech solutions would be very expensive for MTN. The trend is for fintech startups to partner with banks rather than telecoms.

The mobile-phone company is the market leader in most of the 22 countries where it operates in Africa and the Middle East, Bloomberg reported. MTN needs new sources of revenue as customers look increasingly to their mobile phones for more than just calls.

MTN recently agreed to a $1.2 billion settlement with Nigerian authorities for a fine imposed in October 2015 over unregistered SIM cards. MTN’s market value dropped over the course of negotiations with Nigeria, and MTN lost its position in Africa as the No. 1 listed mobile phone operator to rival Vodacom.

MTN CEO Sifiso Dabengwa resigned in November. Former MTN Group CEO Phuthuma Nhleko (2002 to 2011) returned to the company as chairman to deal with the Nigeria fine.

Nhleko is credited with helping make MTN the biggest mobile operator in Africa and Middle East after leading the acquisition of strategic assets and investing in so-called risky markets such as Nigeria and Iran, Lourie said.

Nhleko replaced top MTN executives, naming as CEO the former Vodafone Europe boss Rob Shuter. Shuter is a former banker who worked for Standard Bank and Nedbank. In July, MTN announced it had hired banker Steve van Coller as MTN’s vice president of strategy and mergers and acquisitions. Van Coller is CEO of corporate and investment banking at Barclays Africa and has worked at Deutche Bank.

They point to a move to tackle fintech head-on, Techfincial reported. Financial technology is an economic industry composed of firms that use technology to make financial services more efficient.

It is likely that MTN could aggressively pursue the fintech strategy by acquiring start-ups, which are also on the radar screens of the banking firms.

For example, Rainfin – a Cape Town-based peer-to-peer platform which is the largest in South Africa and focuses on SMEs – is lending more than 1 million rand per day and is backed by Barclays.

South Africa’s popular Snapscan – a cashless, cardless payment app – is backed by Standard Bank.

With their banking skills, van Coller and Shuter both have an opportunity to help MTN conquer the fintech market and reinvigorate the mobile operator, Lourie said.

Buying Barclays Africa would be seen as a direct challenge to Africa’s financial services sector and would help MTN recoup the market it lost when it was fined by Nigeria in December 2015.

MTN has 34 million mobile money customers across its Africa operations who can do money transfers, make payments, and bank deposits. Owning Barclays Africa assets would fast-track the mobile phone operator’s fintech strategy and products, and buy it more customers.

MTN has a track record in integrating big assets. In 2006, MTN spent $5.5 billion buying Dubai-listed Investcom in a deal that helped the South African-based telecom become the largest mobile operator in Africa and the Middle East.

Through its investment in Africa Internet Holdings, MTN has acquired a number of digital companies operating in fashion, hotel and flight bookings, restaurant food delivery services, job sites, and classifieds for car sales in Africa and the Middle East.

The group said on Monday it would continue to expand in areas such as financial services, media, and entertainment, BusinessDayLive reported.

Barclays Africa does business in Botswana, Egypt, Ghana, Kenya, Mauritius, Mozambique, Namibia, Nigeria, Seychelles, South Africa, Tanzania, Uganda, Zambia, and Zimbabwe.