The MTN Group, one of Africa’s largest telecom providers, is reportedly taking steps to offload some assets with plans to sell its stake in Jumia, IHS Towers and also exit the Middle East to focus on Africa.
Bloomberg reported that the telecom giant is looking to cash out on all or part of its $243 million stake in the eCommerce giant, Jumia. This will take advantage of the massive recovery of its shares since the turn of 2020.
In April, 2019, Jumia got placed on the New York Stock Exchange (NYSE), with a $1.5 billion valuation and the IPO looked to be a strategic exit for its major investors, Rocket Internet and MTN Nigeria.
Then, MTN’s 40% stake was worth $600 million, and the proposed sale was geared at reducing its debt burden. Fast forward 6 months to October 2019, and Jumia’s entire market valuation — $523 million — was less than MTN’s initial 40% stake.
As a result of COVID-19, Jumia has once more reclaimed its gargantuan status, and its shares sold as high as $23 on August 4, 2020. However, it dropped 30.4% to $16, just before the news came that MTN was looking to sell its stake.
Jumia currently has a market capitalization of $1.3 billion, and a sale of MTN’s 40% stake could see the company cash out as high $520 million.
Besides Jumia, Bloomberg reports that MTN may also sell its 29% stake in telecom tower company, IHS Towers in the future. With this, MTN might apparently be looking forward to Tower company’s planned IPO on the NYSE.
Note that an IPO on the NYSE would have valued the company at $7 billion, and MTN could exit with as much as $2 billion if everything goes as planned.
The trimming continues as MTN looks set to finally end its Middle East operations after months of battling sanctions with the US government. According to a report by Reuters, the company is already in advanced talks to sell its 75% stake in MTN Syria.
In the first half of the year, the company made just 4% of its earnings from its Middle East operations.