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Cash-strapped Telkom to auction off more assets

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 05 Mar 2020

Financially-constrained Telkom is looking to sell more properties, saying the proceeds will be used to modernise the company’s network.

Liquidity services marketplace GoIndustry has announced an online auction of Telkom’s real estate portfolio located throughout SA, featuring 53 properties consisting of vacant land, double storey and single storey buildings.

Lots in this auction will close on 18 March.

In November last year, Telkom announced the auctioning of 34 properties dotted across the country.

In a statement to ITWeb, the telecommunications company says: “Telkom confirms that its property division Gyro is disposing of 53 properties, which is aligned with the strategy of unlocking value in the Telkom property portfolio.”

Gyro manages Telkom’s property portfolio, which consists of 1 332 properties, comprising exchange and switch, office, client service centre, centre for learning buildings, radio transmission sites and residential dwellings.

The latest auction comes as Telkom faces financial challenges which have resulted in the company looking to cut as many as 3 000 jobs.

Telkom has been facing challenges with declining revenue in fixed voice and fixed data services over the years.

From its integrated report for the year ended 31 March, ITWeb recently reported that hurt by declining voice revenue, Telkom subsidiary Openserve is looking to modernise its network.

According to the report, Openserve contained the revenue decline at 3.3% to R16.9 million (FY2018: R17.5 million), despite voice revenue decreasing by 15.8%.

Telkom explained the decline in voice revenue was caused by migrating customers from legacy to next-generation technologies, and lower call termination rates.

Following the announcement of job cuts earlier this year, analysts said Telkom’s problems are self-inflicted as the company has been protecting legacy technologies at the cost of falling behind with what the market wants and needs.

“Telkom has been undergoing a process of modernising the network for some time now,” says the company in its statement.

It says technological advancements in telecommunication necessitated the need to optimise space requirements for both operational and exchange needs.

“Telkom, through Gyro and Openserve, has embarked on a decommissioning and disposal of properties programme for properties that are deemed to be non-core to operations and have no commercialisation potential (redevelopment or development potential).

“This is an ongoing process as we continue to modernise our network and optimise our property portfolio,” the company says.

Regarding last year’s auction, Telkom says: “We sold 22 out of 34 properties – 65% success rate. Twelve properties from the previous auction form part of the 53 properties, therefore going back for auctioning.”