Telkom has revealed that it is in exclusive negotiations with a preferred bidder over the disposal of the network operator’s mast and towers business within Swiftnet SOC Limited.
The network operator said that once concluded, the disposal of Swiftnet “may have a material effect on the price of the company’s securities”.
Telkom revealed it was in talks in a cautionary announcement published ahead of its half-year results on Tuesday, 21 November 2023.
“The preferred bidder is a consortium of equity investors (including a Black Economic Empowerment partner), led and managed by a reputable private equity firm,” it said.
Telkom said it is currently in negotiations to conclude transaction agreements and added that it will provide an update in accordance with the Johannesburg Stock Exchange’s (JSE) listing requirements.
If successfully concluded, the transaction will be subject to customary conditions for a deal like this, including receiving required regulator approvals and Telkom shareholder approval.
However, Telkom noted that the negations may not lead to a transaction, and it advised its shareholders to be cautious when dealing in its securities until a further announcement is made.
Telkom had planned to list its masts and towers business on the JSE by the end of 2022.
However, the initial public offering was delayed because of unfavourable market conditions related to Russia’s invasion of Ukraine.
In July 2023, Telkom CEO Serame Taukobong revealed that the network operator had begun the process of selling its towers.
“We have been given support to sell the Swiftnet towers outright. We are in the process of achieving that,” said Taukobong.
“Hopefully, in the next month or two, we will be able to announce a successful sale to the market.”
At the time, he said Telkom was negotiating with two bidders.
Some of the funds raised from selling Swiftnet will be used to bolster Telkom’s balance sheet.
“It will be a big contributor to our negative free cash flow,” said Taukobong.
“The cash income from the sale of the towers will help us to recalibrate our balance sheet and put more investment in capex for our fibre business.”
“Post that, we will look at whether we will consider a special dividend. However, we are not thinking about that right now.”