MTN declines to sell stake in struggling Jumia

JUmia

South Africa’s MTN Group Limited said it has no plans to sell its stake in Jumia.

Jumia is the continent’s largest eCommerce company that has been struggling to keep its business afloat with hefty losses since it started operations in the last six years.

MTN Group alongside Orange, AXA and Goldman Sachs Group had invested varied sums of money in Jumia in 2016. As at that time, Jumia was valued at $1 billion according to the company’s internal valuation.

The rebuttal was a follow-up to an exclusive story by Bloomberg. The medium had reported that MTN is exploring a sale of shares in Jumia and was considering an initial public offering of the online retailer on the Nasdaq or New York Stock Exchange.

MTN said in a statement quoted by Reuters News that: “We currently have no plans to dispose of our investment in Jumia in the short term,” MTN Group spokeswoman said in an emailed response to questions.

Jumia was is majorly-owned by Rocket Internet, a German tech investor that has invested in various startups it formed by copying existing eCommerce business models across various continents.

Jumia has not made a dime in profit but has duly made handsome money in revenue between 2013 and 2015 when eCommerce companies saw a spike in online sales due to the rise in oil prices in countries like Nigeria.

Three years down the line, Jumia, Konga and many other eCommerce companies ran into a huge debt trap as oil prices fell and imported goods largely peddled on the site saw varied percentage spike in prices.

As a matter of fact, Jumia said in its last financial update that its EBITDA losses rose to EUR30.7 million which is approximately N12.5 billion on a real-time currency exchange rate basis.

The result further shows that its losses rose by 29.5% on a year on year basis because it reported a negative adjusted EBITDA (gross losses) of EUR23.7 million in 2017 within the same quarter.

The report by Bloomberg that MTN plans to sell its stake is not only confusing but curious given the fact that its equity estimated at 30% does not give it the power to force the listing of Jumia on any stock exchange.

An analyst who craved anonymity said Jumia’s sell-off by any of its major shareholders is imminent given the fact that this is the second time a listing is being rumoured.

In March of this year, Reuters had reported that Rocket Internet planned to sell its stake in Jumia via an IPO on the Paris Stock Exchange.

Rocket Internet has not confirmed nor denied the rumour.