As Jumia’s shares experienced momentary surge due to the rise in Covid-19 induced purchases after going through a rough patch last year, Mobile Telecoms Network (MTN) is planning to latch on this window to sell off its shareholding in the company. Sources at MTN say that the Telco may also sell off its shares in IHS Towers as part of plans to refocus on its core sector. MTN Group Limited holds $243 million interest in Jumia Technologies AG and had previously marked the online retailer as a non-core business. With Jumia’s shares surging to 142% this year, recovering from a dip in 2019, MTN sees this as the best opportunity to offload its shareholding though the management is yet to arrive at a final decision on this.
This news according to analysts may have a negative impact on Jumia’s recovery as MTN is viewed as one of Africa’s most admired brands. Jumia operates in 14 African countries including Nigeria and Ivory Coast where Amazon still lacks distribution infrastructure. Headquartered in Germany, Jumia is run by its two French founders, Sacha Poignonnec and Jeremy Hodara but has run into murky waters in the last two years owning to deteriorating business climate in the continent and regulatory constraints. This led to its dropping below its initial public offering price in 2019 after improper transactions in its Nigeria business were uncovered.
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As MTN faces growing competition across the continent, observers say that the company is having a rethink about its investment across many sectors termed non-core to its primary operations. This they believe is responsible for the flurry of divestment talks within its boardroom in Johannesburg, South Africa. A source at the company says this strategy which has been ongoing through the disposing of non-core assets aims at reducing debt and driving future growth, especially as some of such investments have been mired in debt.
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This informs the talks around selling off its 29% stake in IHS Towers. The MTN has generated $812 million in asset sales that included selling its towers holdings in Ghana and Uganda to American Towers Inc. The company plans include bidding for a license to enter Ethiopia, one of the largest markets that have not yet privatized its telecommunications industry. With over 100 million people, Ethiopia is Africa’s second largest country by population after Nigeria and a potentially huge market with one of the non commodity driven fastest economic growth in the continent, with over a decade running. MTN believes it can replicate in Ethiopia what it achieved in Nigeria, especially as the country still has a single carrier with opportunities for competition.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry