Telkom to seek equity partner for tower property division
CEO Sipho Maseko says that with an equity partner and selling off some properties the tower business can be scaled up quickly
Telkom is seeking an equity partner to help build more mobile-network towers as the former phone monopoly seeks new ways to increase revenue away from its core, fixed-line business.
The company may also sell some of its 1,332 properties to raise cash for the project, CEO Sipho Maseko said on Monday.
Telkom combined towers and real estate into a new unit called Gyro as part of a restructuring two years ago.
“We expect that with an equity partner and selling off some of the properties that are not core and that we are not using anymore we can scale our tower business quite quickly,” he said after Telkom reported full-year results.
The book value of the company’s property portfolio is between R10bn and R12bn, the CEO said.
Telkom is looking to invest in high-growth businesses to offset the long-term sales decline at the fixed-line division.
Telecommunication towers are used by mobile-phone operators to extend coverage and offer high-speed data services such as 4G and 5G.
Telkom has about 6,500, with a plan to build 2,000 more over the next three years.
“With SAa getting ready to roll out 5G there will be a lot more towers required,” Maseko said. “And the Gyro team is well placed to capitalise on that.”
He said the group’s “investment in fibre make a lot more sense because the day we have 5G, we would have already pre-invested in infrastructure that will carry that traffic.”
“Our fibre strategy is informed by how we think about 4G and 5G. We want to drive fibre as deep into the network as we can, so that as and when you have 5G cells and towers, you already have the backhaul infrastructure there,” Maseko said.
Avior Capital analyst Ruhan du Plessis said Telkom was probably best positioned with its fibre compared to its competition. /With Mudiwa Gavaza