Telkom closing in on deal to sell off its towers

Telkom expects to announce details about a deal to sell its Swiftnet tower and masts portfolio on or before 4 April 2024.

In a cautionary announcement to shareholders on Monday, Telkom said they’d made substantial progress on meeting the remaining agreed milestones with the prospective buyer.

This included the parties significantly progressing their negotiations to agree on the transaction’s details.

“[Telkom] expects to be able to make a more detailed announcement on or before it is required to update this cautionary announcement in accordance with the JSE Listings Requirements,” Telkom stated.

The JSE’s listing requirements state that after a company has issued a cautionary, it must give a progress report at least every 30 business
days unless the JSE allows otherwise.

There are three public holidays during March and the start of April — 21 March (Human Rights Day), 29 March (Good Friday), and 1 April (Family Day).

Therefore, 30 business days from 19 February is 4 April 2024.

Telkom first confirmed that it was in advanced talks to sell off its cellular towers in a notice to shareholders on 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 stated.

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.

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.

Then, in July 2023, Telkom CEO Serame Taukobong said that “hopefully, in the next month or two”, they would be able to announce a successful sale.

Taukobong said Telkom was negotiating with two bidders at the time.

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.”

Despite the advanced stage of the negotiations, Telkom said they may still not lead to a transaction.

It advised its shareholders to be cautious when dealing in its securities until it makes a further announcement.

Telkom recently removed its branding from its iconic Lukasrand tower near Groenkloof in Pretoria.

However, it said this was only for maintenance and refresh.