Telkom plans to list its masts and towers business, Swiftnet, on the JSE before the end of March next year and use the proceeds to reduce debt and expand the business, chief executive Sipho Maseko said yesterday. Picture: Jacques Naude/African News Agency (ANA)
TELKOM plans to list its masts and towers business, Swiftnet, on the JSE before the end of March next year and use the proceeds to reduce debt and expand the business, chief executive Sipho Maseko said yesterday.
“Significant progress has been made, including formal engagements with the JSE.
Telkom believes a separate listing of Swiftnet will affirm the valuation of the masts and towers business and its contribution to the overall valuation of the Telkom business, thereby unlocking further value for Telkom,” the group said at the release of results for the six months to September 30.
Maseko said the listing of Telkom’s fibre broadband business Openserve might be next on the cards for a separate listing. “At the moment the sum-of-the-parts valuations of these businesses is far more than what the market values us at,” he said in an interview.
Mobile operators around the world have been offloading their towers and masts to dedicated infrastructure companies or spinning them off into separate listings, and renting back the space to rival companies. This allows mobile operators to generate additional revenue, expand their networks and eliminate maintenance costs.
As an example, IHS Towers, 29 percent owned by Telkom’s competitor in South Africa, MTN, and the largest independent owner and operator of shared telecommunications infrastructure in sub-Saharan Africa, listed on the New York Stock Exchange last month.
Swiftnet, an entity managed by Telkom subsidiary Gyro, operates some 6 225 masts and towers across South Africa. Swiftnet increased revenue 7.3 percent to R674 million in the six months to September 30. The group has valued its masts and towers at R12 billion to R13bn.
Maseko said they would float some 20 percent of the masts and towers business initially.
Tekom’s share price slipped more than 10 percent yesterday afternoon, this after the price had been buoyed over the past few days on speculation that it had been approached for a takeover by MTN. However, Maseko said yesterday that Telkom had instead reached a second roaming agreement in the period, this time with MTN. The first roaming agreement was with Vodacom.
He said this agreement meant Telkom had by far the widest network coverage across South Africa. “For a Telkom customer, it is like buying three for one,” he said.
Over the six-month period, homes passed with fibre increased by 54.2 percent to 707 399. The number of homes connected with fibre now surpassed the number of homes connected with copper, by 43.7 percent, Telkom said.
Telkom managed to sustain revenue and grew earnings before interest tax, depreciation and amortisation (Ebitda) by 1.2 percent in the six months to September 30, a period marred by civil unrest, a global semiconductor shortage and a third wave of Covid-19.
Maseko said the results attested to the success of their investment strategy and cost management through the volatile last quarter.
He said the company would review its dividend policy at year-end, this after it suspended paying dividends two years ago to reduce debt and strengthen the balance sheet.
“We have reduced debt significantly and we have a strong balance sheet,” he said. “There was enough financial flexibility to pounce on an opportunity should it arise, and to invest in growing our fibre business,” he added.
Telkom’s operating expenses fell 3.1 percent year-on-year, contributing to the expansion of the Ebitda margin by 0.5 percentage points to 28.1 percent.
Reported headline earnings per share increased by 30.4 percent to 285.5 cents.
Mobile subscribers increased by 18.8 percent to 16.3 million subscribers, with mobile revenue from Telkom up 9.7 percent to R10.34bn.
“Our strategy to build a data-led network continues to serve us well with 10.3 percent growth in mobile broadband customers representing a surge of over 65.5 percent of our active customer base,” said Maseko.
Openserve’s revenue had stabilised at R6.72bn. Telkom's enterprise business BCX was the most affected by the economic challenges, with its revenue declining by 6.1 percent to R7.46bn.
edward.west@inl.co.za
BUSINESS REPORT ONLINE
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