Mobile operator may reduce Jumia stake

Africa’s biggest mobile network operator MTN is likely to proceed with its plan to reduce its Jumia Technologies stake significantly even as the Nigerian-based e-commerce company soared after listing on the New York Stock Exchange on Friday. Africa-focused Jumia’s share price leapt 75% in New York on Friday, giving it a market value of $1.9bn (R26.6bn). In response, MTN rose 1% to R98.51 on the JSE early on Monday, the best level since it ran into regulatory troubles in Nigeria in 2018. MTN’s stake of about 30% in the company is now worth about R8.2bn, or R4.36 per MTN share. MTN’s share price closed 0.51% up at R98, giving it a market capitalisation of about R184bn. MTN said on Monday it was pleased with the initial public offering (IPO), but did not say how long it intended to hold on to its investment in Jumia. “MTN surely won’t change its strategy merely on market reaction to the Jumia IPO as market performance tends to be volatile,” said Peter Takaendesa, portfolio manager at Mergence Investment Managers. Despite the potential for high returns over the long-term, analysts said MTN should sell or at least reduce its stake. “When it comes time to sell their stake, it will raise a nice chunk of easy-to-use cash [for MTN],” said local money manager Vestact on Monday. Hannes van den Berg of Investec Asset Management said: “We believe that MTN’s capital could be better spent to reduce holding company debt and realising value for its shareholders.” Van den Berg said MTN had indicated it hoped to gain more than R15bn from asset sales over the next three years. As to whether the company has another potential billion dollar company in its portfolio, MTN Group chief executive Rob Shuter said: “We have similar investments in our Middle East markets, not as far progressed as Jumia – we hope they can build and prosper going forward.”