Telkom raises R1 billion in debt issue

Telkom SA SOC Ltd. raised 1 billion rand ($83 million) 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 Ltd. and Vodacom Group Ltd.

After a five-year hiatus, Telkom started selling debt again in 2017 and has raised 4.3 billion rand 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 Tuesday. The company is almost 40 percent owned by the South African government.

While Telkom’s mobile-phone business trails MTN, Vodacom and Cell C Pty Ltd. in Africa’s most industrialized economy, 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 654 million rand floating-rate note maturing in March next year and a 346 million-rand bond with a 7.84 percent coupon, maturing on Sept. 21.

Telkom shares rose 0.4 percent to 52.29 rand as of 1:59 p.m. in Johannesburg, valuing the company at 26.7 billion rand.

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Telkom raises R1 billion in debt issue