Monday , October 18 2021

MTN Group considering sale of its 40% stake in Jumia

MTN Nigeria’s parent company, MTN Group Limited, is reportedly thinking about selling off its equities in one of Africa’s most dominant e-Commerce platforms, Jumia.
This is coming at a time when the South Africa-based telecoms operator is equally considering an initial public offering (IPO) on either the New York Stock Exchange or NASDAQ. MTN Group has yet to release any official statement on this matter.
A spokeswoman for the company today stated that the company “currently has no plans to dispose of its investment in Jumia in the short term.” But Bloomberg reports that other sources close to the company can authoritatively confirm that the developments are taking place.
MTN Group currently holds the biggest (40%) stakes in Jumia which is arguably Africa’s biggest online retailer. The company has its presence in about 14 African countries, including Nigeria where it is in competition with Konga and other smaller e-commerce operators.
Jumia is also one of the most capitalised e-Commerce operators on the continent with an estimated $1 billion enterprise value. According to Bloomberg, the company’s revenue has steadily increased from around 70% in 2012 when the company was established, to 90% in recent times.
It, therefore, becomes puzzling why MTN Group is supposedly thinking of disposing of its shares in Jumia seeing as the company is doing relatively well.
The South African wireless carrier is not the only company thinking of offloading its shares in Jumia as smaller investors such as Rocket Internet SE is also said to be mulling said.
However, this situation plays out, one thing can be guaranteed – Jumia will be just fine. The company still has the likes of Goldman Sachs Group Inc., Millicom International Cellular SA and Orange SA as shareholders.
Note that Jumia was established six years ago in Lagos Nigeria, by two French entrepreneurs – Jeremy Hodara and Sacha Poignonnec.
Why would MTN Group even think about disposing of its shares in Jumia?
According to the report, the telco is heavily indebted and in constant need of money to offset said debts. The company’s debt volume stood at $4.8 billion as at June 2018.
The company operates in 21 countries across Europe, Middle East, and Africa. Nigeria is one of its strongest markets, with MTN Telecommunications Nigeria Limited being the biggest telecoms operator in the country.
As we reported yesterday, MTN Nigeria signed a ₦200 billion loan deal with 12 banks in efforts to raise money and expand its business. The company has yet to pay up the ₦330 billion fine imposed on it by the Nigerian Communications Commission (NCC), neither has it carried out its highly anticipated initial public offering on the floor of the Nigerian Stock Exchange (NSE).

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