Telkom SA announced yesterday it was close to selling its towers subsidiary Swiftnet and the sale of about R500 million of non-core properties could be next as the group leans into a revised strategy to sell non-core assets, CEO Serame Taukobong said yesterday.
Aside from the disposal, Telkom also reported strong interim results that saw headline earnings a share up by 46.7% to 195 cents, after revenue increased 2.5% to R21.8 billion and earnings before interest tax depreciation and amortisation (Ebitda) was up 1.7% to R5.03bn.
The share price shot up 10.23% to R27.38 by yesterday afternoon. Commenting on X, @DailyInvestorSA said: “…Telkom profits soar with 50% boost Telkom reported improved results for the six months through September 2023”, while @jJustinBrownSA said: “Investors are cheering Telkom’s results – particularly its mobile subscriber and revenue growth.”
Further details of the Swiftnet sale, which had an indicative value of just more than R6bn at the last year end, about the preferred bidder and the deal, were likely to be made available in 30 days, Taukobong said in an online interview.
The preferred bidder was a private equity headed consortium of investors that included a black empowerment partner, the group said in a regulatory JSE notice.
Taukobong said proceeds from the sale would be used to strengthen Telkom’s balance sheet and reduce the debt to Ebitda ratio.
He said Swiftnet was principally made up of about 2 000 telecom towers. There were already about 21 000 towers operating throughout the country, so it would not make sense to invest in additional towers to be competitive at this stage, and the business was viewed by the group as non-core, he said.
On the strong interim results, he said: “We are trending in the right direction. We focused on driving top-line growth and cost reductions to offset inflationary cost pressures and the added costs of load shedding.”
He said the interim period had seen good growth in mobile revenue, as well as in the fibre business which was driven by the monetisation of fibre roll-outs, as well as good growth in the IT business due to increased demand for hardware and software from enterprise customers.
“The growth in our mobile and fixed data services demonstrates our investments in next-generation technologies have put us on the right path as data consumption continues to surge across our networks,” he said.
Mobile and fixed data traffic was up by 23% and 18%, respectively, compared with the same time a year before.
He said the company’s strategy and performance was delivering industry-leading connectivity rates, enabling more South Africans access to affordable, high-speed internet.
Its revised strategy was to position itself as the leading digital infrastructure company in the country.
In the past six months, cost-reduction initiatives partially offset inflationary increases and resulted in operating expenses increasing by below inflation at 2.4%. Ebitda growth was impacted by higher bad debt provisions.
Telkom Consumer increased mobile data revenue by 10.3% and its Ebitda was up by 14.6%. Fibre revenue grew by 31.2%.
“These results show we are making steady progress executing our infrastructure-focused strategy under OneTelkom,” said Taukobong.
The company’s full year guidance was unchanged, but the challenging economic climate and uncertainties such as sharp increases in load shedding might impact the year-end results worse than expected.
“Our performance shows we are focused on the right areas,” Taukobong said.
He said the group continued to manage the migration to newer technologies as legacy and fixed voice revenues reduced as expected, and would continue to do so in the coming 12 to 18 months.
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