Telkom

Telkom surged nearly 13 percent on the JSE yesterday as it announced plans to list its masts and towers business as a separate entity.

Telkom expects to make a final decision on the listing of the Gyro Masts & Towers business by the end of March next year.

“Management believes that a separate listing of Swiftnet will affirm the valuation of the Masts & Towers business and its contribution to the overall valuation of the Telkom business, thereby unlocking further value for Telkom,” said Telkom in a statement.

Gyro comprises masts and towers, property investment and property services business, and manages Telkom’s property portfolio, including 6 225 towers. In the year ended March 2021, masts and towers revenue increased by 6.6 percent to R1.23 billion, supported by an 8 percent growth in the number of new leases.

“Unlocking value from Telkom’s portfolio of businesses is a key component of the company’s financial framework and will afford Telkom management flexibility to rebase the balance sheet and reinvest in the business,” said Telkom.

Commenting on the separate listing of Gyro, Peter Takaendesa, head of equities at Mergence Investment Managers, said the listing of mobile network tower assets was long overdue in South Africa. It was an asset class that had been missing on the JSE.

“The announcement today provided that missing piece of the puzzle for the tower business and Telkom needs to do the same for other assets that are subject to the value unlock process, such as the fibre and data centre businesses.

“All the listed telecoms companies have assets that can be listed separately, but this process adds the most value to Telkom as its shares are trading at much lower valuation levels relative to relevant peers,” said Takaendesa.

In November last year Telkom said it planned to unlock shareholder value by getting investors into Gyro, Openserve and its data centre business and had completed a “market sounding process” involving asking investors if they preferred to partner with Gyro’s mast and tower portfolio.

“Telkom is still valued unfairly as a boring, declining fixed-line operator and the value that could be gained by bringing in outside investors or separately listing some of the business units could double the value of the group’s current share price if the board executed well to complete the value unlock process.

“It is not without risks, but there is still a lot of low-hanging fruit to harvest in this regard,” Takaendesa said.

The proposed listing of Gyro as a separate entity comes days after MTN said its affiliate IHS Towers, in which it holds a 29 percent stake, was pursuing a listing on the New York Stock Exchange.

Telkom shares closed 14.8 percent higher at R43.20 on the JSE yesterday.

Editor@tech-talk.co.za

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