The largest telecoms giant in Africa, MTN Group, to sell its Jumia stake. It is considering selling part or all of its $243 million interest in Jumia Technologies AG. This move validates the telecom giant effort to raise more funds to service its debt as well as spreading its tentacles across board.
According to Bloomberg, MTN isn’t taking a chance as they are taking advantage of the 143% share price increase of Jumia stock in 2020. Recall that this increase indicates a total recovery from Jumia’s record low, which was released in 2019.
However, sources have it that no decision about the sale has been reached yet.
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What To Know About Jumia
Jumia is Africa’s largest online retailer and they are operational in 14 African countries including Nigeria, which is one of their biggest markets. However, the headquarters of Jumia Technologies AG is in Germany and run by its two French founders, Sacha Poignonnec and Jeremy Hodara.
At the time this report was drafted, MTN Group was trading ZAR 5,916 losing 1.61% while Jumia AG was gaining at 0.41% to trade at $17.05.
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Why This Could Be Happening:
One major business strategy by MTN to reduce the backlog of debt and open new frontiers of business opportunities is for MTN to dispose of its non-core assets. This has been their strategy in recent times, hence, the need for MTN to sell its Jumia stake.
According to the report, the telco is heavily indebted and in constant need of money to offset its debts. More so, the company’s debt volume stood at $4.8 billion as of June 2018.
Meanwhile, MTN Group has about a 29% stake in IHS Towers, which could also be put up for sale. MTN Group by footprint has generated about $812 million in asset sales that included selling its towers holdings in Ghana and Uganda to American Towers Inc.
In December 2013, MTN, together with Millicom and Rocket Internet, became a 33.3% stakeholder in Africa’s e-commerce and digital services company Jumia Group. MTN has since invested an additional $143 million in Jumia Group, increasing its stake to 41.4%.
Ethiopia is one of the African country that hasn’t privatized its telecoms industry, and being one of Africa’s largest markets, MTN is putting plans in place to bid for a license to enter the Ethiopian market.
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