A spin-off is a type of corporate action where a company creates a new, independent entity by separating a part of its business. Shareholders of the parent company typically receive shares in the newly formed entity in proportion to their original holdings.
The new company has its own management, operations, and financial structure, but shares common ownership roots with the parent.
Spin-offs are used by companies to unlock hidden value, streamline operations, and allow different business units to pursue independent strategies more effectively.
Why Companies Do Spin-Offs
- Strategic Focus: Allows each entity to pursue specialized strategies without being constrained by the broader goals of the parent company.
- Unlocking Shareholder Value: By separating faster-growing or more profitable segments, companies can boost valuations that may be buried in a conglomerate structure and focus on specific objective.
- Transparency and Accountability: Each unit has clearer financial reporting and operational control, making it easier for investors and regulators to assess performance.
- Attracting Targeted Investors: Different investors are drawn to different risk-return profiles (e.g., tech vs. telecom), which can enhance capital allocation and better returns in relative to the risk.
- Regulatory & Compliance Efficiency: Enables better alignment with industry-specific rules, especially in highly regulated sectors like finance or telecom.
The Case for MTN and Mobile Money Spin-Off
MTN Group, one of Africa’s largest telecom companies, has seen explosive growth in its Mobile Money (MoMo) platform, which provides millions of users with access to digital financial services. Yet, this fast-growing fintech arm is still nested within its broader telecom structure. Spinning off MoMo into a standalone entity could yield transformational benefits for all stakeholders.
Below are some of the obvious benefits for MTN as a Publicly Traded Company listed on Ghana stock exchange?
- Valuation Uplift: MoMo operates like a fintech company with high growth potential, distinct from the capital-intensive, slower-growing telecom business. A spin-off would allow the market to properly value it—likely with higher multiples.
- Strategic Clarity: MTN’s core telecom business can focus on infrastructure, data, and connectivity services, while MoMo can pursue financial inclusion, lending, insurance, and digital wallets independently.
- Improved Capital Allocation: Post spin-off, MTN can deploy resources more efficiently without having to subsidize MoMo’s capital needs, which can be raised independently.
- Regulatory Alignment: Separating telecom and fintech operations makes regulatory compliance easier, especially with central banks of Ghana and telecom regulators like NCA.
There are several reason for performing spin-off and here are the benefits for the Standalone Mobile Money Business
- Operational Autonomy: MoMo can build its own tech stack, partnerships, and customer acquisition strategy tailored to financial services, not telecom.
- Access to Fintech Investors: The standalone entity can attract venture capital, private equity, or ESG-aligned impact investors focused on financial inclusion in Africa.
- Innovation & Agility: Free from MTN’s slower decision-making cycles, MoMo can move faster, innovate, and compete with digital-first rivals like M-Pesa, Flutterwave, or Chipper Cash.
- Path to Listing or Strategic Partnerships: As an independent business, MoMo could go public, form joint ventures, or even partner with banks or fintech platforms more freely.
And here are the benefits for the Investing Public
- Targeted Investment Opportunities: Investors can now choose to invest in MTN (telecom) or MoMo (fintech), depending on their preferences and risk appetite.
- Increased Transparency: With separate financial disclosures, investors gain a clearer picture of MoMo’s performance, margins, customer growth, and risks.
- Potential for Value Creation: Early shareholders of MTN may receive MoMo shares or benefit from improved parent valuation, creating upside potential.
- Broader Market Participation: A publicly listed MoMo could become one of Africa’s flagship fintech stocks, increasing retail investor engagement, especially if listed on local exchanges like the Johannesburg Stock Exchange (JSE), Ghana Stock Exchange (GSE), or the Nigerian Exchange (NGX).
There are several spin-offs processed over the years globally but here are notable international examples of corporate spin-offs in the financial markets, across various industries. These cases demonstrate how companies have successfully unlocked value, sharpened strategy, and created growth-focused entities by separating parts of their businesses:
- PayPal from eBay (2015) – USA
- Parent Company: eBay Inc.
- Spin-Off: PayPal Holdings Inc.
- Sector: E-commerce / Fintech
Why?
eBay spun off PayPal to allow each company to pursue independent strategies. PayPal had become a leading digital payments platform with growth potential that was being overshadowed by eBay’s slower growth.
Results:
- PayPal quickly outperformed eBay in market value.
- As of 2023, PayPal’s market cap consistently exceeded eBay’s, reflecting investor confidence in fintech over e-commerce logistics.
- AbbVie from Abbott Laboratories (2013) – USA
- Parent Company: Abbott Laboratories
- Spin-Off: AbbVie Inc.
- Sector: Pharmaceuticals
Why?
Abbott wanted to separate its research-based pharmaceuticals business (AbbVie) from its diversified medical products business.
Results:
- AbbVie grew into a global biopharma giant, largely driven by blockbuster drug Humira.
- Abbott focused on diagnostics, devices, and nutrition, improving operational clarity.
- Ferrari from Fiat Chrysler (2015–2016) – Italy
- Parent Company: Fiat Chrysler Automobiles (FCA)
- Spin-Off: Ferrari N.V.
- Sector: Automotive
Why?
FCA wanted to unlock value in Ferrari, which had a luxury brand appeal and premium pricing strategy not aligned with FCA’s mass-market operations.
Results:
- Ferrari became a high-performing luxury stock with a higher earnings multiple than FCA.
- Investors gained direct exposure to Ferrari’s brand-driven growth.
- Siemens Energy from Siemens AG (2020) – Germany
- Parent Company: Siemens AG
- Spin-Off: Siemens Energy AG
- Sector: Industrial / Energy
Why?
To allow Siemens AG to focus on smart infrastructure, healthcare, and digital industries, while Siemens Energy pursued the global energy transition independently.
Results:
- Siemens Energy attracted ESG-focused investors.
- Siemens AG reduced capital intensity and focused on digitization and automation.
- Alcon from Novartis (2019) – Switzerland
- Parent Company: Novartis AG
- Spin-Off: Alcon Inc.
- Sector: Healthcare (Ophthalmology)
Why?
Alcon, a leader in eye care devices and surgical tools, had a different growth trajectory and capital needs than Novartis’s core pharmaceutical business.
Results:
- Alcon expanded independently in medical devices.
- Novartis sharpened its focus on innovative medicines and therapies.
- Yum China from Yum! Brands (2016) – USA/China
- Parent Company: Yum! Brands (owns KFC, Pizza Hut, Taco Bell)
- Spin-Off: Yum China Holdings Inc.
- Sector: Restaurant / QSR
Why?
Yum! Brands wanted to create a locally managed, operationally independent business focused solely on China, its fastest-growing market.
Results:
- Yum China became a top restaurant operator in China.
- It raised capital via dual listings in the U.S. and Hong Kong.
- Philips Lighting (Signify) from Philips NV (2016) – Netherlands
- Parent Company: Royal Philips NV
- Spin-Off: Signify (formerly Philips Lighting)
- Sector: Lighting / Tech
Why?
To allow Philips to focus on health tech and digital health, while Signify pursued smart lighting and IoT-enabled devices.
Results:
- Both companies developed clearer investor narratives.
- Signify became a global leader in connected lighting systems.
Conclusion
Corporate spin-offs are a proven strategy across global markets to:
- Unlock hidden value
- Provide operational and strategic clarity
- Attract sector-specific investors
- Accelerate growth and innovation
In MTN’s case, a Mobile Money spin-off would follow a successful pattern seen in global tech, healthcare, and industrial sectors—freeing a high-growth business to thrive in its own right. A spin-off of MTN’s Mobile Money business is not just a strategic maneuver—it’s a necessary evolution. It creates focus, growth, and shareholder value while providing a clear path for MoMo to thrive as a standalone fintech powerhouse.
For MTN, this means sharper execution and a cleaner balance sheet. For MoMo, it means freedom to expand, innovate, and scale. For investors, it’s a chance to participate in Africa’s digital financial revolution.
The post Understanding spin-offs: Why MTN should spin off its mobile money business appeared first on The Business & Financial Times.
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