South African tycoon Sipho Maseko locks in $608 million to acquire Telkom stake

In a bold move to revitalize South Africa’s third-largest mobile phone company, a group of investors led by prominent South African businessman Sipho Maseko, alongside Africa’s largest asset manager, the Public Investment Corporation (PIC), is making waves with a bid to acquire a substantial 35-percent stake in Telkom.

With a pooled fund of about R12 billion ($608 million), the investors are poised to inject much-needed capital into the struggling telecom operator, which has suffered a $660-million asset writedown and a significant decline in its share price.

Joining forces with Maseko’s investment vehicle Afrifund, the investors include Axian Telecom, a Mauritius-based telecommunications company linked to Malagasy businessman Hassanein Hiridjee., and Tanzanian tycoon Rostam Azizi.

Together, they are considering the possibility of acquiring Telkom’s fiber and tower units and merging them with Axian’s assets, aiming to establish a robust African-focused infrastructure company.

The strategic move would not only consolidate the mobile businesses of the two firms but also open the door for the potential sale of Telkom’s BCX unit.

The 35-percent stake, valued at about R4.9 billion ($250 million) based on the present0pl share price, could be combined with PIC’s existing shareholding to strengthen the group’s overall position.

Presently, the PIC holds 13.4 percent of Telkom’s equity, while the government retains a 40.5-percent ownership stake in the operator.

Since the start of the year, Telkom’s shares have declined by nearly 14 percent, resulting in a market capitalization of approximately R14 billion ($700 million).

To mitigate the challenges posed by an increasingly complex operating environment and power cuts in South Africa, the telecom operator announced plans to reduce its workforce by up to 15 percent in February.

With Maseko at the helm, backed by PIC and the potential synergies with Axian Telecom, Telkom stands to benefit from the injection of capital and the creation of an African-focused infrastructure powerhouse.