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Telkom’s Earnings are Expected to Increase due to the Sale of Swiftnet
Telkom, South Africa’s biggest telecommunications company, is seeing an increase in earnings because of the sale of its masts and towers business, Swiftnet. The company said on Friday its basic earnings per share was expected to increase by over 300% after the sale. The announcement comes as part of a much larger deal that will see the South African giant divest its shareholding in Swiftnet.
The sale of Swiftnet closed on 27 March, with Telkom receiving R6. 575 billion in provisional cash. The sale is part of Telkom’s drive to unlock value from non-core assets and focus on core operations. Swiftnet has attracted considerable interest from investors over the years due to its growth potential and utility.
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According to a note on the Telkom website, the profit generated from this one time sale is the main factor of the anticipated upward revision of earnings. Basic earnings per share for the financial year ended March 31, 2025 are expected to be R15. 42 per share, compared with R3. 85 per share for the same period in 2024. Headline earnings per share, which is considered a key financial metric by investors, is also likely to rise by 10%.
Telkom sold Swiftnet to a consortium involving private equity firm Actis and Royal Bafokeng Holdings, the buyer of telecoms infrastructure in South Africa that includes 4, 000 masts and towers which are leased by key mobile network operators in the country. Swiftnet has been critical for the country’s mobile connectivity, but the company said it did not consider them core assets under its new strategy.
The move by Telkom to sell Swiftnet follows a massive overhaul of operations as part of the group’s “OneTelkom” strategy in which the firm wanted to streamline operations, improve its balance sheet by restructuring its debt and invest in next-generation technology infrastructure, such as fibre networks and mobile data services. “The sale of Swiftnet serves as a turning point in the destiny of Telkom, giving it a chance to focus on areas that grow while maintaining our position as the largest telecommunications infrastructure provider in South Africa,” CEO Serame Taukobong said in a statement.
Telkom has adopted a strategy to improve its financial health and its operational effectiveness over the last few years, continuing with a strong growth in mobile service revenue and fibre data revenue, driven by continued demand for next generation products. In spite of challenges to operating efficiencies such as declining traditional voice and legacy data revenues, Telkom has been able to financially monetize its fibre rollouts and more aggressively grow the IT business.
The sale of Swiftnet is part of Telkom’s plan to unlock shareholder value, in which it aims to increase liquidity and improve debt-to-earnings ratio, increasing its prospects of shareholder returns. Telkom’s move has been well received. Many investors view Telkom as a good long-term resource and one that will operate to drive dividend yield over the medium and longer term.
Telkom’s annual results will be published in June but, it says, “will publish more trading updates as soon as we have a better sense of how it will perform over the whole of the year.” To date, the successful sale of Swiftnet represents a significant milestone on Telkom’s journey to financial strength and strategic renewal.
Telkom’s earnings are set to improve due to the sale of Swiftnet, and while the latter will help the company make more money, it will also put its foot forward for success in an increasingly competitive market.
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