TWO FOR THE PRICE OF ONE: MTN'S FINTECH SPIN-OFF COULD BE UGANDA'S SMARTEST INVESTMENT YET OR ....

There’s a quiet disruption underway at MTN Uganda, and it’s dressed in the language of shareholder value, strategic clarity, and platform transformation. 

But while the telecom giant’s planned spin-off of its mobile money arm into MTN New FinCo has been marketed as a win-win for investors, a closer reading suggests that shareholders—especially institutional ones—need to bring both their optimism and their caution to the table.

Let’s start with the promise. MTN Uganda’s fintech operations—anchored in MTN Mobile Money (MoMo)—are being carved out into a new entity, MTN New FinCo, which will eventually be listed separately on the Uganda Securities Exchange. Shareholders of MTN will maintain an economic interest in the new company through a Trust, and later receive direct shares when the new entity lists in 3 to 5 years.

From a growth story perspective, the pitch is compelling. MoMo has evolved from a side hustle to a fintech powerhouse, posting sh250 billion in profits in 2024 alone. Projected forward, a bull-case model sees MTN New FinCo dividends rising by 18 percent annually and share prices doubling within five years of listing. Investors who buy MTN stock now stand to benefit from both the telecom cash cow and the high-growth fintech colt.

But those who believe in the power and integrity of public markets must be both thoughtful and a bit careful. For all its financial appeal, this is not a straightforward spin-off. It is a restructuring built around legal complexity, and one that quietly shifts a large part of MTN’s value into a structure that lacks the full accountability and transparency of a publicly listed company.

Here’s the issue: rather than listing MTN MoMo directly by introduction—a path that would have preserved the public ownership and disclosure framework—MTN has chosen to transfer MoMo’s operations into MTN New FinCo, a private company. Minority shareholders’ interests in this new company will be held not directly, but through a trust. This trust is not listed, nor is it subject to the Capital Markets Authority (CMA) or Uganda Securities Exchange (USE) disclosure rules.

This might seem like a clever workaround—especially with promises of future unbundling—but it introduces significant risk and uncertainty. Moving a public company’s most valuable asset into a private trust structure

creates opacity and erodes investor protections in ways that should give shareholders pause.

Among the most pressing concerns:

• Governance Gaps: The trust is unlikely to meet the governance standards required of listed entities. Its memorandum and articles of association (memarts) will not be subject to CMA review or public oversight.

• Disclosure Loopholes: MTN New FinCo, being a private company, will not be bound by the same continuous disclosure obligations as listed firms. Investors may no longer receive timely, detailed financial reports or material updates.

• Loss of Minority Protections: Listed companies are required to protect minority shareholder rights. These safeguards—including voting rights, access to information, and equitable treatment—may be diluted or lost entirely in the trust structure.

• Board Composition and Accountability: The board governing MTN New FinCo is not the board that investors originally backed when they bought MTN shares. The separation breaks the continuity of oversight and strategic alignment.

• Regulatory Ambiguity: Can institutional investors like NSSF even hold ownership in a trust structure? Pension funds are typically restricted from investing in unregulated vehicles. This raises real questions about whether Uganda’s largest institutional investor can maintain its exposure to the MoMo business under the new framework.

In effect, shareholders are being asked to trade direct ownership of a high-growth public asset for a beneficial interest in a private one, held on trust until such time as the new company lists. Even with mechanisms like the “dividend adjustment trust” to make up for tax disadvantages, the structure still introduces governance and liquidity risks that public market investors do not typically sign up for.

To be fair, MTN’s motivations are not malicious. The company is executing on its “Ambition 2025” strategy, which aims to unlock platform value and attract fintech-focused partners. A standalone MTN New FinCo could, in theory, bring in strategic investors, leverage fintech expertise, and scale faster.

But this could have been done without eroding the public character of MoMo. A listing by introduction—using the existing MTN MoMo structure—would have retained all the benefits of transparency, liquidity, and investor protections, while still allowing the business to attract capital and partnerships.

Instead, what we have is a carefully engineered workaround that takes a key public asset and places it into a private holding structure, promising to “make things right” in a few years. For long-term investors—especially those who prize corporate governance and transparency—this trade-off deserves scrutiny.

That’s not to say there’s no opportunity here. 

But to fully capitalise on this opportunity, investors must go in with eyes wide open. They must advocate for stronger governance of the trust, demand clear disclosure commitments, and seek legal clarity on how their rights will be protected in the interim period.

Uganda’s capital markets need success stories, yes. But they also need discipline, transparency, and trust—not just in the financial sense, but in the institutional one.

MTN’s fintech spin-off could still be that story. But only if the complexity doesn’t obscure the core principle: that public wealth should not be privatized by proxy.