Telkom offloads Swiftnet tower unit in R6.75bn deal

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 22 Mar 2024
Telkom has disposed of its Swiftnet masts and tower business.
Telkom has disposed of its Swiftnet masts and tower business.

Telkom has sold its Swiftnet mast and tower business to a consortium of equity investors for R6.75 billion.

The company today announced a step forward in its strategic transformation with the initiation of a sale agreement for all shares in its wholly-owned Swiftnet subsidiary.

Last month, Telkom said negotiations with the potential buyer of its Swiftnet masts and towers business had reached an advanced stage.

In August, Telkom kicked off negotiations with the two bidders selected to proceed with engagements. The disposal process further advanced in late 2023 and Telkom entered an exclusivity period with one preferred bidder.

Swiftnet, a key player in the South African market, has extensive masts and towers infrastructure, with approximately 4 000 installations and leasing co-location space to major mobile network operators, says Telkom in a statement.

“This decision marks a pivotal moment in Telkom's journey towards unlocking shareholder value and streamlining our focus on core business operations,” says Serame Taukobong, group CEO of Telkom.

“This positions Telkom as a leading infrastructure company at the heart of South Africa’s digital future. This divestiture aligns perfectly with our strategy to concentrate on our infrastructure assets, while realising the inherent value in non-core holdings.”

The disposal entails the sale ofSwiftnet to the purchaser, Towerco Bidco, a newly-incorporated entity comprising of a consortium of equity investors led and managed by Actis, which holds 70% of the purchaser’s shares, with the balance of 30% held by Royal Bafokeng Holdings.

Serame Taukobong, group CEO of Telkom.
Serame Taukobong, group CEO of Telkom.

According to the telecommunications firm, this move underscores Telkom's commitment to fortifying its financial position, reducing debt and enhancing liquidity.

“Beyond the financial implications, this transaction ensures seamless continuity for our related businesses, particularly Telkom Consumer and Openserve, by guaranteeing continued access to Swiftnet's infrastructure under mutually beneficial terms,” Taukobong adds.

“Actis sees long-term value in the Swiftnet opportunity and welcomes the continued association with Telkom as it continues to provide access services to Telkom Consumer and Openserve, and as Actis continues to grow its digital infrastructure portfolio,” comments David Cooke, managing partner at Actis.

While the transaction is subject to shareholder and regulatory approvals, Telkom says it remains optimistic on the potential benefits for all stakeholders.

“We believe this strategic move will create long-term value for Telkom and its shareholders, cementing our position as a leader in South Africa's evolving digital landscape,” concluded Taukobong.