Telkom has raised R1bn in its first debt issue of the year as South Africa’s biggest landline provider looks to invest in its network and take on rivals including MTN Group and Vodacom Group.
After a five-year hiatus, Telkom started selling debt again in 2017 and has raised R4.3bn from nine bonds in 12 months. The Pretoria-based company has significantly increased capital expenditure in recent years to focus on its mobile phone business, which reported a maiden profit in 2016 as landline use declines.
Telkom has sold bonds to diversify its funding sources and reduce the cost of borrowing, a spokesman said on Tuesday. The company is almost 40% owned by the South African government.
While Telkom’s mobile phone business trails MTN, Vodacom and Cell C, the unit is adding customers and needs investment to cope with the additional traffic. That’s put some strain on the company’s cash reserves. The operator is also expanding in broadband services, especially to corporate customers, following the acquisition of Business Connexion in 2016.
Monday’s bond sales included a R654m floating-rate note maturing in March next year and a R346m bond with a 7.84% coupon, maturing on 21 September.
Telkom shares rose 0.4%. — Reported by Renee Bonorchis and Loni Prinsloo, (c) 2018 Bloomberg LP