SA Tribunal gives Telkom go-ahead for Swiftnet sale

South Africa's Competition Tribunal has accepted a recommendation by the Competition Commission that Telkom be allowed to sell its masts and towers subsidiary, Swiftnet, to a consortium of equity investors called Towerco, for R6.75 billion (US$377 million).

The Tribunal's acceptance comes a month after the country's Competition Commission recommended that it approve the proposed transaction, with conditions.

"Shareholders are hereby advised that an important milestone has been achieved, in that following the recommendation from the South African Competition Commission, the Competition Tribunal of South Africa approved the disposal on September 3, subject to certain conditions which have been accepted by the purchaser," Telkom SA said in a statement issued via the Johannesburg Stock Exchange (JSE).

The sale means the consortium will receive 4,000 sites used by Telkom and other mobile networks.

Genesis of the tower deal

In March 2024, Telkom announced the Swiftnet sale. However, at the time the deal was still subject to shareholder and regulatory approvals.

Then in May 2024, Telkom shareholders, including the South African government, which holds a 40.5% stake in Telkom, voted to sell the Swiftnet business to a consortium consisting of Actis and Royal Bafokeng Holdings.

The sale led to Actis and Royal Bafokeng forming a new entity, called Towerco, to acquire the stake.

Telkom said Actis would own a 70% stake in the new entity, with Royal Bafokeng Holdings holding the remaining 30%.

Telkom Group CEO Serame Taukobong. (Source: Telkom Group)

"This decision marks a pivotal moment in Telkom's journey towards unlocking shareholder value and streamlining our focus on core business operations," Telkom Group CEO Serame Taukobong said back in March.

Telkom's tower sale history

The telecoms operator has been planning the sale for a while now. In November 2023, it entered into exclusive negotiations with a "preferred bidder" for the potential sale of Swiftnet and marked the asset as "held for sale" by the group.

In February 2024, Telkom announced that the deal had reached an advanced stage and it was moving forward with the sale.

Telkom has previously described Swiftnet as one of the largest owners and operators of masts and towers infrastructure in South Africa, having approximately 4,000 installations and leasing collocation space to major mobile network operators.

The Competition Commission confirmed that Swiftnet's core business includes leasing space on its owned mast and tower-related infrastructure to customers, including mobile network operators.

In September 2021, Telkom decided to spin out Swiftnet and had plans of a separate listing on the JSE. But in 2023, it shifted the plan to sell the business instead.

*Top image source: Mario Caruso on Unsplash

— Matshepo Sehloho, Associate Editor, Connecting Africa