Actis, Bafokeng snaps up Telkom’s tower infrastructure

by | Mar 22, 2024

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The private equity firm Actis has bought out the national telecoms transmissions network, with the baTswana royal house's holding company for R13bn

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Telkom, South Africa’s third-largest mobile operator, has announced the terms of sale for its masts and towers business, Swiftnet, in a deal valued at R6.75 billion. The move comes as the partly state-owned operator faces debt exceeding its R13 billion market value while pursuing growth plans.

The buyer is UK private equity firm Actis, with investment holding company Royal Bafokeng holding a minority stake. Royal Bafokeng Holdings, the investment arm of the Royal Bafokeng nation, will own no less than 30% of Swiftnet. The acquisition is based on an enterprise value of R6.75 billion, subject to adjustments including debt, capital expenditure, and working capital movements. Shareholder approval is required, with a circular to follow.

Telkom initially considered listing Swiftnet separately in 2021 but later abandoned the plan, citing market conditions. The sale is part of Telkom’s strategy to reduce its net debt, which stood at over R18 billion as of September. Telkom’s shares surged almost 9% in morning trade on Friday, valuing the company at about R14.5 billion, though they are down nearly a fifth overall.

Swiftnet contributed approximately 10% of Telkom’s core profit in the six months to September. Telkom is now focusing on growth plans for its business units, particularly Openserve, South Africa’s largest wholesale infrastructure connectivity provider, and Telkom Consumer, the country’s largest fixed broadband provider.

“This decision marks a pivotal moment in Telkom’s journey towards unlocking shareholder value and streamlining our focus on core business operations,” said Serame Taukobong, Telkom’s group CEO.

Actis, founded in 2004 and headquartered in London, has raised $25 billion (R473 billion) to date and has committed over $1.5 billion to the sector globally. Digital infrastructure will remain a key part of Actis’ investment strategy, according to Telkom.

“Actis sees long-term value in the Swiftnet opportunity and welcomes the continued association with Telkom,” said David Cooke, managing partner at Actis.

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