Separate real estate unit may then be listed on stock market
Move is part of turnaround strategy led by CEO Sipho Maseko
by Loni Prinsloo and Colin McClelland
Telkom SA SOC Ltd. plans to break out its telecommunications towers and real estate assets into a separate unit that may then be listed on a stock market, according to two people familiar with the matter.
The new entity would be run by a new, property-focused management team charged with generating extra revenue for Africa’s biggest landline provider, said the people, who asked not to be identified because the plans are private. Pretoria-based Telkom has one of the largest real estate portfolios in South Africa and Chief Executive Officer Sipho Maseko wants it to contribute more to earnings, they said.
The move extends a turnaround strategy at the former phone monopoly under Maseko, who has cut costs and helped to engineer a near quadrupling of the stock price in his four years at the helm. The workforce has been reduced by about half to 12,000 people and the wireless unit is now profitable. The creation of the property business is part of the next phase of Maseko’s strategy, which will involve an examination of each of the company’s operations, said one of the people.
The shares rose 0.9 percent to 73.68 rand as of 12:34 p.m. in Johannesburg on Monday, valuing the company at 38.8 billion rand ($3.1 billion). The business is about 39 percent owned by the South African government.