Axian Telecom, a telecommunications provider based in Mauritius, is reportedly considering acquiring Jumia Technologies AG, an ecommerce company in Africa.

Sources familiar with the matter indicate that discussions are in the early stages, and no final decisions have been made.

Axian has raised US$600 million to refinance debt and potentially fund the acquisition.

Jumia, founded in Nigeria in 2012 and publicly listed in New York in 2019, currently has a market value of around US$500 million.

If a deal proceeds, Jumia may be delisted.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Africa’s e-commerce potential faces execution hurdles despite massive growth forecasts

The continent’s e-commerce market is projected to more than triple from $317 billion in 2024 to over $1 trillion by 2033, representing a 13.8% compound annual growth rate 1.

This explosive growth potential explains why Axian sees value in Jumia despite the e-commerce company’s current financial struggles, including a negative profit margin of -48.53% and cumulative losses that have driven a 75% stock decline over five years 2.

Africa is expected to surpass 500 million e-commerce users by 2025, with a young, tech-savvy population driving adoption at a 17% annual growth rate 3.

However, these promising demographics haven’t translated to profitability for Jumia, which has shifted from aggressive expansion to cost-cutting measures, including planned exits from South Africa and Tunisia by the end of 2024 4.

The gap between market potential and execution reality highlights why Jumia, once valued above $1 billion as one of Africa’s first unicorns, now has a market capitalization of approximately $500 million, making it an acquisition target.

2️⃣ Telecommunications and e-commerce convergence creates strategic advantage in underserved markets

Axian Telecom’s interest in Jumia represents a growing trend of telecommunications companies expanding into adjacent digital services to capture more value from Africa’s digital transformation.

The company has already transformed from its origins as a textile manufacturer into Africa’s sixth-largest telecom operator with revenues approaching $3 billion in 2023—a tenfold increase over the past decade 5.