TELKOM today announced that it was placing its plan to pursue a separate listing of its masts and towers business, Swiftnet, on ice due to “recent global events, current market conditions and the impact on the capital markets”.
The listing was supposed to have been announced this month.
In the wake of Russia’s invasion of Ukraine, markets have been volatile.
Casey Delport, an investment analyst – Fixed Income, Anchor Capital, said today: “As we move further into March, Russia’s invasion of Ukraine continues to dominate headlines, with markets now starting to worry that the war will persist substantially longer than the quick conflict originally anticipated.”
Delport highlighted that the conflict would cause a stagflationary shock on the global economy, and a general increase in risk aversion sparks the flight of capital to safety.
Only a few months ago, Telkom was on track with its listing plans.
In November, when Telkom released its results for the six months to September 30, chief executive Sipho Maseko said the listing was slated on the JSE before the end of March.
The proceeds would be used to reduce debt and expand the business, Maseko said, adding that “significant progress has been made, including formal engagements with the JSE.”
The telecoms group had initially advised its shareholders on September 21, 2021, that it believed a separate listing of Swiftnet would 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.
However, Telkom announced today that due to current events, the board had resolved to postpone the separate listing of Swiftnet on the JSE.
“The board remains committed to its value unlock strategy, which is premised on Telkom’s market capitalisation not representing its intrinsic value. Against this backdrop, the board continues to consider all strategic options that support its value unlock strategy, which include affirming the valuation of Swiftnet and its contribution to the valuation of Telkom,” it said.
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.
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.
Telkom said it would provide further information at the appropriate time on the best route to deliver this in the current market conditions.
The news comes hot on the heels of the firm winning broadband spectrum yesterday.
The Independent Communications Authority of South Africa (Icasa) said yesterday that Telkom and Rain had been declared the winning bidders of the first round of broadband spectrum, with Telkom forking out R1.5 billion and Rain paying R1.15bn.
The long-awaited release of additional spectrum will help telecoms players rollout 4G and 5G technologies, which will enable them to lower data costs and add network capacity as data demand has surged amid Covid-19.