A Telkom store at N1 City in Goodwood, Cape Town. Picture Ian Landsberg/Independent Newspapers
Telkom was operating in a challenging environment, but expects to continue to see positive momentum from a number of mitigation measures it has implemented such as investing in infrastructure, driving cash generation and managing its working capital.
The JSE-listed telecoms group said yesterday in a circular to shareholders about the vote on the R6.75 billion sale of its masts and towers subsidiary Swiftnet to international private equity group Actis, that South faced a unique set of challenges that include weakening growth prospects and high unemployment.
Royal Bafokeng Infrastructure, a vehicle owned 100% by Royal Bafokeng Holdings (RBH), will become a 30% shareholder of the Actis subsidiary purchasing Swiftnet. Telkom shareholders will cast their votes in a meeting on May 24, 2024.
Actis invests in infrastructure across energy transition, digitalisation transition, and supply chain transformation. RBH manages a portfolio of listed and unlisted assets in a range of geographies and sectors, including telecoms, infrastructure, property, financial services, resources and industrials.
Telkom said yesterday in the circular that consumers were monitoring their costs and discretionary spending carefully, including scrutinising their mobile and data expenses, because their disposable incomes had been eroded by inflation and recurring interest rate hikes.
“While the economy rebounded post-Covid-19, the outlook for the country is weighed down by persistent load shedding, which negatively impacts the economy, including food prices,” Telkom’s directors said.
“In addition, the local competitive landscape is fiercely contested, with well-resourced larger competitors investing in their data capabilities and newer, agile players disrupting the data space,” they said.
To mitigate the challenges, investments were being made in infrastructure, particularly alternative energy solutions, to alleviate the effects of load shedding and maintain the availability of the fixed and mobile networks. Cash generation was being driven by harnessing operating expenditure savings.
In the meantime, options would continue to be considered to maximise value for shareholders as the directors said Telkom’s market capitalisation was not reflecting its intrinsic value.
“As such, interest in particular assets continue to be carefully monitored, with the goal of realising the best return for shareholders. Telkom has future growth plans in place for its remaining assets and will continue operating them to the benefit of the group,” they said.
They said the reduction of Telkom debt through use of the disposal proceeds would strengthen its balance sheet and enable it to release cash for investment in assets and deployment in pursuit of growth opportunities.
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