Telkom sells Swiftnet stake

By Nicola Mawson for Telkom
Johannesburg, 15 Feb 2007

SA's largest fixed-line operator Telkom has sold a 30% stake in Swiftnet to a consortium for R55 million.

The sale to Radio Surveillance Consortium (RSC) follows "a competitive sale process run by an independent adviser," the company told shareholders yesterday.

RSC is made up of Radio Surveillance Services and Royal Security. A spokesman says the consortium is fully compliant with the Department of Trade and Industry's black economic empowerment (BEE) codes.

In the company's 2006 annual report, Telkom states the process of disposing of a 30% stake in Swiftnet in order to comply with existing licence requirements from the Independent Communications Authority of SA (ICASA) was due to be completed by "the end of August 2006".

Telkom, which did not provide vendor finance for the deal, lists its investment in Swiftnet to the end of March at R48 million. This is through a combination of debt and equity funding as cited in its annual report. One analyst says this implies Swiftnet's value is around R200 million in total.

CEO Papi Molotsane said: "Telkom and Swiftnet have demonstrated their commitment to the spirit and principles of empowerment with this transaction. We are proud to be at the forefront of empowerment in the telecommunications sector, and we look forward to working with RSC to ensure Swiftnet's continued success."

The deal, which is subject to competition and ICASA approval, will see Swiftnet being compliant with ICASA's requirement that licence-holders must have 30% empowerment shareholding.

Potential investors

Swiftnet, a wholly owned subsidiary of Telkom, provides asynchronous wireless access on Telkom's X.25 network, Saponet-P. The company trades as Fastnet Wireless Service and provides services to companies that use retail credit card and cheque point-of-sale terminal verification, telemetry, security and vehicle tracking.

In September, Telkom said a shortlist of potential investors vying for the stake in Swiftnet had been finalised.

At the time, spokesman Lulu Letlape, who would not name the companies on the shortlist, said Telkom's independent advisor Nedbank Capital had evaluated the applicants. The company looked at bidders' ability to finance the deal, BEE credentials and the ability to enhance the Swiftnet business.

Telkom had unsuccessfully attempted to fulfil ICASA's requirement since 2001, when it purchased the 40% stake in Swiftnet that was held by then BEE partner VHR Wireless.