Telkom sells tower business for R6.75 billion

 ·22 Mar 2024

Telkom is selling its mast and towers business housed inside Swiftnet for R6.75 billion.

The purchaser of the mast and towers business is a consortium made of UK Private Equity Firm Actis (70%) and BEE-partner Royal Bafokeng Holdings (30%).

Swiftnet owns roughly 3,900 commercially available towers and masts across South Africa.

The base purchase price of R6.75 billion represents Swiftnet’s value on a debt-free basis and will be subject to other conditions, such as positive adjustments for any cash, negative adjustments from continuing loans from Telkom, and positive or negative adjustments for working capital.

As of Friday, 22 March, R360 million remains outstanding under a shareholder loan advanced by Telkom to Swiftnet.

“At the Closing Date, a portion of the Existing Shareholder Loan of up to R225 million may remain outstanding as payable by Swiftnet to Telkom together with applicable interest on the outstanding loan amount until fully settled (Continuing Telkom Loan),” the group said.

“To the extent that this occurs, the Continuing Telkom Loan will not be transferred to the Purchaser (and will be excluded from Sale Equity) and the Base Purchase Price will be adjusted accordingly.”

Telkom’s board previously said that Telkom’s market capitalisation (roughly R13 billion) does not represent its intrinsic value.

The sale forms part of the company’s value-unlock strategy as it is not a core asset. The disposal proceeds will allow the group to reduce its debt.

Telkom said it has ambitious growth plans across its business units, especially fibre-provider Openserve and broadband provider Telkom Consumer.

“The reduction of Telkom debt through application of the Disposal proceeds will strengthen Telkom’s balance sheet and enable Telkom to release free-cash-flow for investment in Telkom’s core businesses and deployment in pursuit of growth opportunities,” it said.

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