Telkom's timeline for finalizing the sale of its tower assets appears to have been extended beyond its initial deadline. In mid-June, Serame Taukobong, the company’s CEO, informed TechCentral that the complete sale of Swiftnet, which manages Telkom's masts and towers, would occur within a few weeks.
Despite indicating an imminent sale, Telkom refrained from disclosing the potential buyer's identity. However, likely candidates for the purchase included specialized tower operators such as IHS Holding, Helios Towers and American Tower Corporation.
Swiftnet, a wholly owned Telkom subsidiary responsible for the management and commercialization of the masts and towers portfolio, reported modest revenue growth of 0.9% to R1.3 billion for the fiscal year ending March 31. This growth was partly attributed to the construction of new towers and related facilities.
When asked about any updates regarding the anticipated sale date for the towers, Telkom responded that it is actively engaged in discussions with two bidders. The company anticipates providing market updates during its interim results announcement in November. The identities of these bidders were not disclosed.
In the previous year, IHS Holding concluded a substantial deal with MTN South Africa, acquiring 5,701 towers for R6.4 billion. This positioned IHS as the largest tower operator in the country. However, the situation has become less favorable since then.
Equally significant is the decline in IHS's valuation over the past two years. While its shares were valued at $16.69 each upon its listing on the New York Stock Exchange in October 2021, they have since dropped to approximately $7.
In line with a global trend, South African telecommunications companies have been divesting their tower businesses or selling them to specialized tower firms. This strategic move enables them to raise capital for endeavors like fast-growing fintech services. Shedding unnecessary infrastructure reduces costs and allows these companies to concentrate on delivering top-tier services across their networks. The proceeds from these sales also offer a favorable outcome that can be directed towards shareholders or channeled into product development.
In the South African context, Cell C was the pioneer in selling its towers to American Tower Corporation. Additionally, Vodacom established a new subsidiary to manage its local tower portfolio, although it has not made any definitive decisions regarding involving a strategic investor.