South Africa’s MTN Group, one of Africa’s largest telecom provider, is reportedly looking to trim down its assets with plans to sell its stake in Jumia, IHS Towers and exit the Middle East to focus on Africa.
According to Bloomberg, the telecom giant is looking to cash out on all or part of its $243 million stake in Africa focused eCommerce giant, Jumia. This will take advantage of the massive recovery of its shares since the turn of 2020.
Recall that on April 12, 2019, Jumia debuted on the New York Stock Exchange, 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.
MTN, having listed Jumia as one of its non-core business, seems to be reviving its plans to sell now that Jumia's shares are recovering. The timing is however interesting,
Note that Jumia's parent company, Rocket Internet, also sold its 11% stake in Jumia, right before the announcement of the company's Q1 2020 financial results. MTN's reveal also comes right before Jumia plans to announce its financials on August 12 2020.
During the pandemic, Jumia has once more reclaimed its unicorn status, and its shares sold as high as $23 on August 4, 2020. However, it dropped a few figures to $16, just before the news came that MTN was looking to sell its stake.
Jumia currently has a market capitalisation of $1.3 billion, and a sale of MTN's 40% stake could have made the company cash out as high $520 million.
However, its stake has since dropped to 18.9% and a sale would currently be valued at $245 million.
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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.
The telecom company wants a renewed focus on Africa, and is looking to list its Ugandan division on the country's exchange, and bid for a licence in Ethiopia, one of Africa's largest telecom market that is yet to be privatised.
