Telecom giants, MTN is planning to sell off part or all of its $243 million stakes in Jumia, Africa’s largest e-commerce. According to sources, the company is looking to use the money from the sale to pay down debt and enter new markets.
The sale will be coming after Jumia’s shares surged 142% this year, signifying a recovery from a dip in 2019. According to Bloomberg, no final decisions about the sale have been made because the plans are private.
Before now, MTN had marked Jumia as a non-core part of its business and could be shedding it as part of its 1 billion three-year asset-disposal plan.
Founded by Sacha Poignonnec and Jeremy Hodara, Jumia has grown steadily to become the biggest e-commerce company in Africa. The company currently operates in 14 countries including Nigeria.
Last year, the e-commerce listed on the New York Bourse with a valuation of over $1 billion. After listing, however, its share price dropped below its initial public offering price after corruption was uncovered in its Nigerian branch.
With the drop in share price, the company lost its unicorn status. However, the company has started to recover with the share price surge this year. The recent surge has earmarked Jumia as part of the non-core assets MTN is looking to dispose of.
The development comes after the company sold its towers holdings in Ghana and Uganda to American Towers Inc. The sources revealed that MTN has generated 14 billion rands ($812 million) in asset sales.
The report also added that the company has a 29% stake in IHS Towers, which it may sell in the future.
MTN Extends Uganda telecom Licences
Although MTN has not publicly announced its intent to sell its Jumia stake, it recently made huge progress in its Ugandan market where it recently closed a 12 years extension of its telecommunications licence.
The negotiations and discussions for the licence took quite long. According to MTN chief executive officer, Wim Vanhelleputte, the company started applying for a licence extension in October 2017 and just concluded in June 2020.
He explained that the recent licence costs $100m for 12 years up from the $6m they paid through a very competitive international bidding process in 1998.
Beyond the fees, Vanhelleputte revealed that MTN made some obligations. He said that the company will invest over $300m (Shs1.1 trillion) over the next five years to enhance the coverage to cover 90% landmass up from 70% they currently have in Uganda.
Also, the telecom company is to take MTN Uganda public on the Uganda Securities Exchange with 20 per cent of shares in the next 24 months (2 years).
After the successful licence extension, the company plans to bid for a license to enter the Ethiopian market, one of the largest markets that have not yet privatized its telecommunications industry.
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