South Africa’s Competition Tribunal has approved the $346 million sale of Swiftnet, Telkom’s tower business to TowerBidco. three months after the deal was approved by shareholders.
In March 2024, Telkom, South Africa’s fourth-biggest telco by subscriber base, announced the sale of Swiftnet, which owns over 4,000 towers, to strengthen its balance sheet. Telkom shareholders approved the sale in May.
The sale continues a trend of South Africa’s biggest telcos selling their tower assets due to balance sheet optimisation and shareholder pressure to offload “non-core” assets. Vodacom, MTN and Cell C have also done the same in the last two years as telcos preferred to outside the tower services instead of holding them directly.
In June 2022, MTN sold 5,701 towers to Nigeria’s IHS Towers for R6.4 billion (~$337 million) to fund the purchase of spectrum to high-demand spectrum frequencies and provide additional balance sheet flexibility.
In July 2022, Vodacom announced that it would unbundle its over 9,000 tower assets into a separate subsidiary. The telco said the move was to enhance asset returns and lower communication costs. In 2023, Cell C announced that it would switch off tower access and have its subscribers roam on towers owned or leased by MTN.
“We’re seeing telcos rather deploy their capex into more strategic things like buying spectrum and improving network capabilities,” said Jimmy Moyaha, founder of investment firm Lebowa Capital.
The sale of tower assets is also linked to shareholder pressure for telcos to create more value.
“Share price underperformance [has led] to pressure from shareholders which results in the companies convincing themselves that the tower assets are ‘non-core’,” said Tshepo Magagane, a financial analyst.
In the past two years, when most of the deals were made, Vodacom, MTN and Telkom’s share prices have declined by 38%, 53% and 39% respectively.