MTN shares soar after approval for mobile money service in Nigeria

MTN Group Ltd.’s shares surged in Johannesburg after it moved a step closer to getting a license to operate lucrative mobile-money services in Nigeria, Africa’s most populous nation. 

The continent’s largest wireless carrier jumped as much as 19% and was up 13.7% at 11 a.m. local time, the highest since 2015. The stock is the year’s best performer on Bloomberg World Telecommunications Index. The company received an in-principal approval from the Central Bank of Nigeria and will now work toward gaining final consent, according to a statement on Friday. 

MTN, Airtel Africa Plc and other African rivals 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 -- with both companies ready to launch mature technologies and processes,” 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.” 

Nigeria has 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. 

Read More: In Bid to Lure Tech Unicorns, Nigeria Bourse Reviews IPO Rules

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.