Telkom towers sale gets green light

Telkom’s proposed sale of its masts and towers business, housed in Swiftnet, for an estimated R6.75 billion has received the green light from South Africa’s competition watchdog.

The Competition Commission announced today that it has recommended that the Competition Tribunal approve the proposed transaction.

The primary acquiring firm, TowerCo, was established for the purposes of the proposed transaction. It is jointly controlled by the Actis Ohio Fund and Royal Bafokeng Infrastructure Investments. 

The Actis Ohio Fund is a South African en commandite partnership established and managed by Actis Ohio SA. Actis Ohio is ultimately owned and controlled by Actis LLP. 

Royal Bafokeng Infrastructure is controlled by Royal Bafokeng Holdings, which is, in turn, controlled by a trust. 

The Actis Group is a global investor with investments in energy infrastructure, long life infrastructure, digital infrastructure, real estate and private equity. 

In South Africa, Actis Group is invested in the food retail, education, fibre and internet services sectors. 

The Royal Bafokeng Group is primarily an investment holding company with minority interests held in various investments across diverse sectors and geographies. 

These include infrastructure, property, financial services, telecoms, pharmaceuticals, resources and industrial sectors.

The primary target firm, Swiftnet, is wholly owned and controlled by Telkom, a JSE-listed state-owned company.

It is one of the largest owners, operators and developers of masts and towers infrastructure in the South African market. It owns approximately 3,900 commercially viable masts and towers in South Africa

Swiftnet’s core business includes leasing space on its owned mast and tower-related infrastructure to customers, including mobile network operators, enabling such customers to deliver connectivity to their respective subscribers or customers and operate wireless networks.

Swiftnet also provides wireless in-building solutions that allow its customers to provide mobile network connectivity within shopping centres, buildings and other public infrastructure and offices in approximately 28 locations across the country.

“The Commission is of the view that the proposed transaction is unlikely to substantially lessen or prevent competition in any market,” the CompCom announced.

“To address public interest concerns, the merger parties have made procurement commitments to firms that are either small/medium enterprises or that are owned by historically disadvantaged persons for a period of five years from the merger implementation date.”

This comes after Telkom shareholders approved the sale earlier this year.

The telecom giant announced in May this year that its shareholders unanimously voted to approve the disposal at the company’s general meeting held in the same month.

Telkom announced at the time that it would sell its masts and towers business for a base purchase price of R6.75 billion.

The company said the disposal constitutes a Category 1 transaction in terms of the JSE’s listing requirements, as it exceeds 30% of the company’s market cap.

The telecoms giant said the disposal is in line with its stated value-unlock strategy, which includes considering non-core assets for disposal.