By Kelechi Deca
For many observers, it is not if, but when, as Mauritian based Axian Telecom warms up to snatch up Africa’s leading e-commerce firm, Jumia. While the people at Jumia are working hard to keep the talks under the sheets, insiders say the deal would most likely go through if Axian pushes a little harder than the $500 million market value of Jumia.
Axian, which primarily offers telecommunications services in Africa, has not hidden its desire to acquire Jumia Technologies AG where it presently holds 8% of shares while itching to grab more. The company recently raised US$600 million to refinance its debt in a move observers have interpreted as an arming and preparation process for a possible takeover of Jumia. An ambition the management of the telecom’s outfit has expressed in the last two months when it started building a stake in Jumia.
If Jumia agrees with whatever Axian would push on the table, the deal would not only help Jumia expand beyond its present market size of nine countries while also giving Axian access to Africa’s largest market, Nigeria. Analysts believe the deal would be a win-win one as both entities would gain market access and there is the likelihood of Jumia’s market value gaining momentum to shore up its share prices which has not been enjoying the best of attention in recent times.
It could be recalled that Jumia presently has a mixed ownership structure, combining institutional investors, individual shareholders, and potentially company insiders. The company has about 14.93% of its shares held by institutional investors, with the remaining 85.07% held by public companies and individual investors. Its well known major institutional shareholders include Baillie Gifford & Co, D.E. Shaw & Co., and State Street Corp.
During its public offering in 2019, Jumia experienced a dilution which led to the increase in the total number of outstanding shares while potentially impacting the ownership percentage of existing shareholders.
Major shareholders such as the MTN Group and Rocket Internet sold their significant shareholding which was gobbled up by institutional investors leading up to Jumia’s IPO making it the first African companies to achieve “unicorn” status with a valuation of more than $1-billion. Often referred to as the “Amazon of Africa”, Jumia has had to do its own mapping in some of its markets and set up logistics networks to cater to a young and increasingly tech-savvy population that uses smartphones to bridge gaps in infrastructure and services.
The proposed acquisition is most likely going to lead to an enhanced business ecosystem and customer lock-in as Axian could effectively bundle Jumia’s e-commerce services traversing online shopping, food delivery, travel bookings, payments with its core telecom offerings such as mobile data, voice, and fiber broadband. Analysts are in agreement that this would inevitably create a powerful, sticky ecosystem for customers. Also Axioncould leverage its massive subscriber base to drive adoption of Jumia’s services, offering integrated deals and promotions within the countries where it operate where Jumia is yet to penetrate, and combining Axian’s customer usage, data insights with Jumia’s shopping behavior data would create powerful targeting capabilities for personalized offers and advertising.
Jumia equally stands to gain from Axian’s extensive physical retail footprint with airtime sellers, shops, and mobile user base to provide unparalleled channels to rapidly scale its JumiaPay. Moreso, there is great opportunity to seamlessly integrate JumiaPay as the default payment method for Axian bills, top-ups, and bundled services would significantly boost transactions. The new entity that would come out of the merger could offer more comprehensive digital financial services leveraging Axian’s reach and Jumia’s platform.
ith a wide geographical spread spanning West Africa, North Africa, East and Southern Africa, Europe, and United Arab Emirates, the potential of Jumia is unarguable, thus a relationship with Axian may likely deepen its expansion especially within the southern African region with well developed e-commerce infrastructure. Moreso, this is coming at a time Jumia is said to be mulling the introduction of EV vehicles through a partnership with BILITI in California to add e-vans. There are also claims that the company is testing drone delivery services in Africa. A pilot program was just announced for on-demand delivery in Ghana.
This marriage according to market watchers has huge potential as it will tap into Axian Telecom’s already established telecommunications services, ICT infrastructure and mobile money services across Africa leveraging on its expansive subsidiaries across 32 countries and territories in Africa, Oceania, and the Indian Ocean islands.
Market watchers say that one of the huddles the takeover bid might face is the United States regulators against the backdrop of the present ownership structure of Axian Group which is wholly owned by Hassanein Hiridjee, a Malagasy born, French entrepreneur.
Kelechi Deca, a journalist and public affairs analyst writes from Lagos.
