Telkom announced the finalisation of a R6.575 billion (about US$354 million) transaction that hands over its Swiftnet tower portfolio to a partnership between private‑equity firm Actis LLP and Royal Bafokeng Holdings. The sale covers roughly 4,000 masts and towers that underpin mobile and fixed‑line services nationwide. Actis will own 70 % of the new vehicle, Towerco Bidco, while the Bafokeng group takes the remaining 30 %.
Why the Swiftnet Sale Matters
The deal is more than a cash injection; it signals a strategic pivot for Telkom. For years the company juggled both network operations and service provision, a model that increasingly looks outdated as peers trim non‑core assets. By off‑loading Swiftnet, Telkom frees up capital to double‑down on its “OneTelkom” vision – a data‑led growth agenda focused on expanding fibre, 5G rollout and cloud services.
Financially, the transaction tightens the balance sheet. After settling R4.75 billion of interest‑bearing debt, Telkom plans to use the remaining cash to strengthen liquidity and award a special dividend of R500 million, roughly R0.98 per share. That payout represents about 27 % of the post‑debt cash pool, rewarding shareholders who have watched the telco navigate a challenging market.
Regulatory approval was a key hurdle. The Competition Tribunal cleared the sale in September 2024, while the Independent Communications Authority of South Africa (ICASA) gave the green light for the consortium to inherit Swiftnet’s tower licences. Both approvals were essential to avoid anti‑trust concerns and ensure continuity of service for mobile operators that lease the infrastructure.
Industry‑wide, the move puts Telkom in line with a wave of tower divestitures. MTN South Africa and Cell C have already sold their tower arms, leaving Vodacom as the sole major operator still owning its own sites. The trend reflects a belief that tower businesses thrive under specialist owners who can raise capital and optimise the assets, while operators focus on customer‑facing services.
What Lies Ahead for Telkom
With Swiftnet out of the picture, Telkom’s interim results for the six months to September 2024 show promising signs. Mobile service revenue grew 10 %, fibre data revenue jumped 15.5 %, and free cash flow stayed positive at R768 million. Those figures suggest the company can sustain growth without the heavy capital outlay required to maintain a tower fleet.
Looking forward, the proceeds will likely fund accelerated fibre roll‑outs in underserved regions and the expansion of 5G coverage in urban hotspots. Analysts expect Telkom to leverage its stronger balance sheet to secure financing for these projects at better rates, given the reduced debt load.
Advisors FTI Capital and legal counsel Bowman Gilfillan helped steer the deal, underscoring the complexity of telecom transactions in a regulated market. For Actis, the acquisition builds on a recent exit from Octotel, a South African fibre network, reinforcing the firm’s appetite for infrastructure assets that promise steady cash flows.
Stakeholders are watching how Telkom will balance its reduced asset base with the ambition to become South Africa’s digital backbone. If the company can channel the freed‑up capital into next‑generation networks, the Swiftnet sale could be a catalyst for a more resilient, technology‑focused future.