What you need to know:
- Stock drop. Jumia has traded as high as $49.77 per share. But the stock has fallen to about $11, compared with the IPO price of $14.50, which gives the company a market value of about $867m from $1.5b in 2016.
MTN Group, a major shareholder in Jumia Technologies AG, has said the fall in the e-commerce group stock price is unfortunate.
Speaking to Bloomberg, a US-based media agency, the MTN Group chief executive officer, Mr Rob Shuter, said: “It is regrettable that the value has gone down so much.”
The decline in Jumia’s share price, according to the African Report, has accelerated since the e-commerce platform said in August that sales consultants in Nigeria had been involved in placing improper orders which were then cancelled.
Jumia has traded as high as $49.77 per share but the stock has fallen to about $11, compared with the IPO price of $14.50, which gives the company a market value of about $867m from $1.5b in 2016.
MTN’s interest in Jumia, according to Bloomberg, is now worth less than $100m.
The move comes at a time when MTN is behind schedule in its bid to generate about $1b in asset sales over the next three years.
The fall, Bloomberg reported, makes the e-commerce group less viable for MTN to sell a stake in the near term.
This follows a six-month lock in period where the telecom would not sell its shareholding in the e-commerce platform.
“The post IPO lock up period of Jumia, in which we have an 18.9 per cent stake has expired and, as at 29 October, this stake is valued at approximately $94.3m,” Mr Ralph Mupita, the MTN Group chief financial officer, said in a statement earlier.
According to Mupita MTN has through its Asset Realisation Programme, which was announced in March, achieved $141m out of the $1b target.
However, the telecom said it hopes to attain more money through disposal of its tower assets in Uganda and Ghana.
“We continue to make steady progress in this regard and, following American Towers Corporation’s announcement of its acquisition of Eaton Towers, we are in advanced discussions to dispose of our 49 per cent holdings in ATC Ghana and ATC Uganda which we value at between $471m and $539m respectively,” he said.
The sale is expected to help MTN meet its target of generating a $1b in asset sales over three years.
A statement by ATC highlighting the definitive agreement to acquire Eaton Towers including the assumption of existing debt, of approximately $1.85b, said the company continues to expect the transaction to close by the end of 2019, subject to customary closing conditions and regulatory approvals.
Acquisition of the stakes in each of the joint ventures with MTN in Ghana and Uganda, ATC said, are also subject to the closing of the Eaton Towers transaction.
MTN group performance
According to Mr Shuter: “Service revenue grew by 9.6 per cent while earnings before interest, tax, depreciation and amortization (EBITDA) marginally improving by 0.6 per cent to 35.1 per cent.
“We remain committed to driving access to Internet and financial services and in quarter three, we added 4.7 million active data users and 2.2 million mobile money subscribers across the portfolio. Our Ayoba messaging platform is now available across five markets and is already recording 515,000 active users per month,” Mr Shuter revealed.
Various disposal efforts
Botswana’s Mascom for $300m has been scrapped and events at Jumia Technologies AG have made a sell less viable.
Further proceeds could be generated by the redemption of the Nigeria unit’s preference shares, which MTN values at $315m, according to Mr Mupita.
The MTN group is awaiting a ruling from the central bank of Nigeria on the matter.
A proposed sale of HIS Towers - which is separate to the $1b plan - may be revived as shareholders including MTN prepare for a fresh tilt at an IPO next year, people familiar with the matter said this week.
MTN has been exploring asset sales while focusing on key markets such as Nigeria.
In South Africa, MTN and its rivals are battling with regulator curbs on data prices, weak consumer confidence and a delay over the release of new spectrum.
Overall customer numbers increased by 3.5 million in the third quarter to 244 million across MTN’s operations in 21 countries across Africa and the Middle East.