IHS Weighs Bid for Telkom’s African Tower Business

Loni Prinsloo, Bloomberg News

Information brochures sit on display inside a phone store operated by Telkom SA SOC Ltd. at the Menlyn Park shopping center in Pretoria, South Africa, on Tuesday, July 25, 2017. South Africa is evaluating assets it could sell to pay for this month’s 2.2 billion rand ($169.5 million) bailout of unprofitable carrier South African Airways, Finance Minister Malusi Gigaba said in letter to parliament. Photographer: Waldo Swiegers/Bloomberg , Bloomberg

(Bloomberg) -- New York-listed IHS Holding Ltd. is weighing a bid for South Africa’s Telkom SA SOC’s tower unit, according to people familiar with the matter.

Deliberations are focused on the structure of the potential deal, although Telkom remains open to offers from other companies and there is no guarantee IHS will buy the unit, according to the people, who asked not to be identified because the discussions are private. The Swiftnet business is worth about 8.7 billion rand ($472 million) based on future expected cash flows, according to a recent note from Nedbank Group Ltd.

IHS and Telkom declined to comment on the matter. Telkom shares rose as much as 6.6% on the news, closing 4.2% higher on Tuesday in Johannesburg.

Tower companies — including IHS Towers, American Tower Corp. and Helios Towers — have been expanding in Africa to tap rising demand for broadband as smart-phones become more widespread. Meanwhile, mobile companies have increasingly sought to spin off their towers to focus on their core business, with Vodafone Group Plc’s African unit Vodacom separating its towers portfolio into a new unit in 2021.

IHS Towers is the biggest Africa-focused tower company and has been acquiring assets in South Africa as the country prepares for a scaled roll-out of a fifth generation mobile network. The firm reached a sales-and-lease back tower deal with MTN Group Ltd. in 2021.

State-owned Telkom this month said it was expecting offers for its Swiftnet mast and towers unit in March, following the board approval of a full or partial sale of the business.

Telkom, South Africa’s third-largest operator, abandoned a plan to list Swiftnet last year as the local market stumbled and instead began seeking a buyer for the unit.

(Updates with Telkom shares and company comments in the third paragraph)