The news:
- Telkom has halted the sale of Openserve, suggesting a reassessment of its asset management strategy.
- Holding Openserve may influence Telkom's financial structure while offering potential revenue from South Africa's increasing broadband demand.
- This decision underlines Telkom's commitment to enhancing connectivity services and meeting evolving telecom needs.
Telkom’s decision to halt the sale of Openserve, its wholesale and network division, marks a key shift in its asset optimization strategy. This choice to retain Openserve, rather than divest it for immediate financial gain, suggests that Telkom is now prioritizing long-term growth opportunities within its core network infrastructure.
In March 2024, Telkom moved to sell its Swiftnet masts and towers business for R6.75 billion ($355.4 million) to a consortium led by Actis and Royal Bafokeng Holdings. This sale was part of a wider initiative to improve liquidity and reduce debt. However, its decision to withdraw Openserve from the market represents a marked departure from its recent asset-light strategy. Openserve plays a crucial role as the provider of broadband infrastructure across South Africa, and Telkom’s decision to keep it could point to a broader pivot toward strengthening its presence in South Africa’s telecom infrastructure.
Financially, retaining Openserve could have mixed impacts. While Telkom misses out on immediate liquidity from a sale, it retains valuable network assets that may drive future revenue growth. As demand for high-speed connectivity rises in South Africa, Telkom can leverage Openserve’s network to provide more data services, tapping into a revenue stream that has been expanding rapidly with the increasing adoption of broadband services. Additionally, retaining Openserve may allow Telkom to exercise greater control over operational costs, service quality, and technology deployment.
Operationally, keeping Openserve could streamline the rollout of high-speed fiber and 5G infrastructure, enabling Telkom to meet South Africa’s growing digital needs. With the retained infrastructure, Telkom is positioned to ensure service reliability and scale up connectivity services more effectively.
Telkom’s choice to retain Openserve also stands out against regional industry trends, where many African telecom operators are divesting non-core assets to simplify operations and focus on service delivery. By choosing to keep Openserve, Telkom indicates confidence in the strategic value of controlling its core network assets, potentially setting a new approach in the regional telecom market. This strategic decision could influence how African telecom operators view asset retention, particularly as the continent's broadband and data needs continue to grow.
Ultimately, Telkom’s choice reflects a broader shift in how it approaches its assets and plans for future growth. By maintaining Openserve, Telkom aligns itself with the evolving demands of South Africa’s digital market, aiming for resilience and sustained growth in the face of increasing connectivity needs.
