Telkom’s recent announcement results in a surge on JSE

Telkom’s recent announcement of its plan to list its masts and towers as a separate business entity was followed by a quick rise in placement on the JSE as the telecommunications company surged nearly 13 percent.

The broadband and communications company is working towards making a final decision on the listing of the Gyro Masts & Towers, with March 2022 as a deadline. 

In a statement, Telkom shared that managing directors believe that this separation will affirm the valuation of the Masts & Towers business and its general contribution towards the value of Telkom as its own entity. It’s believed that Telkom will benefit from the move, increasing its worth in the short and long run.

“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.

The Gyro group encompasses Masts and Towers portfolio, Real Estate Portfolio, and Property Services. It also currently manages Telkom’s property portfolio, which includes 225 towers.

Commenting on the separate listing of Gyro properties, Peter Takaendesa, head of equities at Mergence Investment Managers, said that this move is long overdue. He referred to the action as a “missing piece of the puzzle” for tower businesses. He also hinted that Telkom should consider doing the same for other assets that would effectively enhance the value of other businesses, such as fibre and data centres.

In 2021, the telecommunications service provider announced its intention to unlock shareholder value by encouraging investors to open their pockets to Gyro and Openserve. During this time, investors were questioned to see if they preferred to partner with Gyro’s mast and tower portfolio only.

By bringing in outside investors or separating listings, Telkom could double its value.

Telkom’s proposition and plan to separate Gyro was received just days after MTN announced that its affiliate, IHS Towers, was pushing for a spot on the New Your Stock Exchange.