The Competition Tribunal of South Africa has given the green light for Telkom’s divestiture of its masts and towers subsidiary, Swiftnet, to Towerco Bidco, following a recommendation from the Competition Commission. The sale to Towerco Bidco, a new entity jointly owned by Actis and Royal Bafokeng, has been approved with certain stipulations, which the buyer has agreed to adhere to. This development was disclosed in a report to Telkom’s shareholders, confirming the tribunal’s sanctioning of the transaction.
The Competition Commission had previously evaluated the potential impact of the deal on market competition and concluded that it was not expected to significantly diminish or impede competition in any relevant market. Nonetheless, the commission recommended that certain “public interest concerns” should be taken into consideration.
Swiftnet, which operates nearly 4,000 masts nationwide, leases spectrum on its infrastructure to various customers and offers wireless solutions for buildings.
In March 2024, Telkom entered into a deal with a consortium led by Actis, agreeing to sell Swiftnet for an enterprise value of R6.75 billion (approximately over $350 million), structured as a combination of debt and equity. The ownership of Towerco Bidco is split between Actis, which holds a 70% stake, and Royal Bafokeng Holdings, which owns the remaining 30%. The completion of the sale was contingent upon receiving the green light from Telkom’s shareholders and regulatory bodies.
A shareholders’ vote was called for in April, and in May, Telkom’s shareholders, including the South African government which possesses a 40.5% share of Telkom, cast their votes in favor of the transaction. Subsequent to the Competition Commission’s endorsement in August, the deal awaited the final approval from the Competition Tribunal. After a month’s deliberation, the tribunal has now officially approved the sale, allowing the transaction to proceed.
With the approval of the sale of Swiftnet to Towerco Bidco, Telkom is set to join the ranks of MTN South Africa and Cell C, which have previously sold their tower infrastructures. This strategic move will leave Vodacom as the sole major mobile operator in South Africa that still retains ownership of its tower assets.
Serame Taukobong, the CEO of Telkom Group, has pointed out that this divestiture aligns with the company’s strategy to enhance shareholder value and concentrate on its primary business operations.
For the quarter that ended on June 30, 2024, Telkom witnessed a revenue increase of 3.9%, reaching R10.9 billion (approximately $587.2 million). This growth was primarily fueled by the escalating demand for next-generation network (NGN) services and a significant 14.6% rise in the number of mobile subscribers, which now exceeds 21 million.
The transaction involving Swiftnet is indicative of Telkom’s dedication to bolstering its financial health. By executing this deal, Telkom aims to alleviate its debt burden, improve liquidity, and position itself more robustly in the competitive telecommunications market.
