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  • Business - Companies
  • Updated: November 02, 2020

MTN Use Jumia To Reduce Debt Burden After Fraud Case Faceoff, Sell Stake In African Markets

MTN Use Jumia To Reduce Debt Burden After Fraud Case Faceoff

MTN Group is cashing in on its investment in various African markets, as the company continues to reduce risk. MTN Group is also trying to resolve its debt issue, and the telecoms firm is using Jumia and its stake in African telecoms market to reduce its debt burden.

AllNews gathered that MTN's 18.9 percent stake in Jumia, a German-owned e-commerce company in Africa, has been sold to raise $138 million, “The group has now fully exited its 18.9 percent investment in Jumia Technologies AG (Jumia), realising a total consideration of approximately R2.3 billion (US$138 million)," MTN said.

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The company added that “We are proud to have been a partner in the evolution of one of Africa’s pioneering online marketplace businesses and will continue our relationship with Jumia through ongoing operational partnerships in some markets.”

MTN sold it a stake in Jumia after an accusation of fraud against the e-commerce platform, following claims that Jumia had lied or omitted vital information from its filing statements - Jumia had filed for an IPO on New York Stock Exchange, the statement released for the filing was said to have been cooked to lure investors towards Jumia's shares.

In an AllNews report, Jumia later agreed to settle the fraud case out of court, offering to pay $5 million and $1 million to settle the case after investors instituted a class action lawsuit against the e-commerce company. Although, despite paying off investors to drop the lawsuit, Jumia said the financial settlement doesn't mean it is admitting wrongdoing.

Other Markets MTN Used To Raise Funds

MTN also disclosed that the company has sold its stake in its subsidiaries in Zambia and intends to sell some in Ghana and Syria will go next. It was disclosed that MTN raised R204 million after localising it 8 percent shares in MTN Zambia. The shares were obtained by Zambia's National Pension Scheme Authority (NAPSA).

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“We are pleased to announce that a sale and purchase agreement has been concluded to transfer an 8 percent holding in MTN Zambia to the National Pension Scheme Authority (NAPSA) in Zambia. The group has received net proceeds of approximately R204 million for the transaction.”

Meanwhile, 12.5 percent stake in MTN Ghana will also be localised, “which will increase MTN Ghana’s free-float on the Ghana Stock Exchange (GSE) to 25 percent”. Also, MTN will exit Syria fully by putting its 75 percent stake in MTN Syria on sale, with 20 percent shareholding in Belgacom International Carrier Services SA (BICS) to be sold as well.

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