Telkom appears to need more time than its originally expected to conclude a deal to sell its tower assets.
In mid-June, group CEO Serame Taukobong told TechCentral that Swiftnet, which houses the masts and towers portfolio, would be sold in its entirety within weeks.
Although it said a sale was imminent, Telkom would not be drawn on who the proposed buyer was, though likely candidates included specialist tower operators such as IHS Holding, Helios Towers and American Tower Corporation.
Swiftnet owns more than 4 000 towers. Taukobong said at Telkom’s annual results presentation in Sandton two months ago that the business would be sold “at the right price”.
Swiftnet is a wholly owned subsidiary of Telkom that manages and commercialises the group’s masts and towers portfolio. It saw marginal revenue growth for the year ended 31 March of 0.9% to R1.3-billion, helped by the construction of new towers and other facilities.
Asked whether there were updates on an expected date for the towers’ sale, Telkom said it is “continuing discussions with the two bidders and we expect to update the market at our interim results in November”. It did not name the two bidders.
Last year, IHS Holding completed the acquisition of 5 701 towers from MTN South Africa in a deal valued at R6.4-billion, making it the country’s biggest tower operator. But a year after that deal, things are not quite so rosy.
Governance
Investment firm Blackwells Capital joined MTN and Wendel – IHS’s second largest shareholder — in voicing concerns about alleged governance issues at the cellphone tower business. MTN feels it deserves to have a greater say in decisions made by IHS, as together with Wendel, they own about 45% of the company and think shareholders are entitled to more of a say. IHS is determined to maintain its independence.
More important, perhaps, is the decrease in IHS’s value over the last two years. When it listed on the New York Stock Exchange in October 2021, its shares were valued at $16.69 apiece, but they have since fallen to about $7.
Read: MTN completes R6.4-billion South Africa towers sale
South African telecommunications firms have either carved out tower businesses or sold them to specialist tower companies, a move also seen globally. By doing so, they have raised money for such purposes as funding fast-growing services, such as fintech. Divesting themselves of unnecessary infrastructure saves money and allows them to focus on providing high-quality services that run over the networks. The sales also return a welcome windfall that can be returned to shareholders or used to invest in product development.
Read: Vodacom to spin off tower portfolio in South Africa
In South Africa, Cell C was the first to sell its towers – to American Tower Corporation. Vodacom has also formed a new subsidiary to host its local tower portfolio, but has yet not made any decision to bring in a strategic investor. – © 2023 NewsCentral Media
