Telkom has struck a deal with a consortium comprising Actis and Royal Bafokeng Holdings to offload Swiftnet, its towers and masts business, in a significant debt and equity transaction valuing Swiftnet at R6.75 billion.
If finalized, Telkom will follow in the footsteps of competitors MTN South Africa and Cell C by divesting tower infrastructure to focus on core business activities, leaving Vodacom as the sole major mobile operator retaining ownership of its towers.
Under the terms of the agreement, Telkom will sell Swiftnet to a newly established entity named Towerco Bidco, with Actis holding a 70% stake and Royal Bafokeng Holdings holding the remaining 30%.
“This decision marks a pivotal moment in Telkom’s journey towards unlocking shareholder value and streamlining our focus on core business operations,” stated Telkom Group CEO Serame Taukobong in a press release on Friday. Swiftnet boasts approximately 4,000 high sites across South Africa.
Taukobong emphasized, “This divestiture aligns perfectly with our strategy to concentrate on our infrastructure assets while realizing the inherent value in non-core holdings… This move underscores Telkom’s commitment to fortifying its financial position, reducing debt, and enhancing liquidity.”
“Beyond the financial implications, this transaction ensures seamless continuity for our related businesses, particularly Telkom Consumer and Openserve, by guaranteeing continued access to Swiftnet’s infrastructure under mutually beneficial terms,” he added.
While an enterprise value of R6.75 billion has been assigned to Swiftnet as the “base purchase price,” the actual amount paid by the Actis/Royal Bafokeng consortium will be subject to adjustments. These adjustments include positive adjustments for cash, negative adjustments for Telkom loans to Swiftnet, negative adjustments for debt, negative adjustments for capital expenditure, and adjustments for working capital, all calculated as of the effective date of the transaction.
Interest at a rate of prime minus 5% will accrue for Telkom on the total purchase price from the effective date up to and including the closing date.
The consortium intends to finance the acquisition of Swiftnet through a combination of equity and third-party debt. However, the transaction is contingent upon approval from shareholders and regulators.
