Shareholders of Telkom, a South African service provider, will soon vote on a proposal to sell the company's towers and masts to a group led by private equity firm, Actis. Last month, Telkom South Africa confirmed the sale of its tower unit, Swiftnet, for ZAR 6.75 billion (USD 355 million) to Actis. This move aims to reduce debts and improve the company's financial position.
However, the deal is not finalized yet. According to local reports, Telkom has circulated a document to its shareholders discussing the sale of its assets. A general meeting is scheduled for May 24, whereby shareholders will decide on the proposed sale. If approved, Telkom will follow the lead of other mobile operators in South Africa, such as MTN and Cell C, who have sold their tower infrastructure to focus on their core business. Notably, Vodacom will be the only major operator left owning its towers.
Swiftnet owns approximately 4,000 high sites across South Africa. The Actis-led group will finance the purchase of Swiftnet through a combination of equity and third-party debt. However, regulatory approval is still required for the acquisition to proceed. Telkom will now have the option to lease towers without the responsibility of maintenance.
Telkom Group CEO, Serame Taukobong, stated, "Beyond the financial benefits, this transaction ensures smooth operations for our related businesses, particularly Telkom Consumer and Openserve, by ensuring continued access to Swiftnet's infrastructure under favorable terms."
A Strategic Move
Selling towers and masts presents Telkom with a myriad of advantages that extend beyond mere financial gains. Firstly, by divesting these assets to a group spearheaded by Actis, Telkom can substantially alleviate its debt burden, which in turn enhances its financial health and resilience. This reduction in debt not only mitigates financial risks but also strengthens Telkom's ability to invest in future growth opportunities and withstand economic fluctuations.
Moreover, shedding non-core assets such as towers and masts enables Telkom to streamline its focus on its core competencies and strategic priorities. By reallocating resources and attention away from infrastructure management towards core business functions, Telkom can enhance operational efficiency and agility.
Furthermore, the sale of towers and masts can foster partnerships and collaborations with the acquiring entity, Actis, and other stakeholders involved.
Lastly, the infusion of capital from the sale provides Telkom with additional financial flexibility and firepower to pursue strategic initiatives, such as network expansion, technology upgrades, and customer experience enhancements.
