Telkom to open 2 000 more tower sites to rivals

Telkom’s property management company Gyro plans to open many more buildings and high sites to other mobile operators as the partially state-owned company looks to extract more profit from its property portfolio.

In the year ended 31 March 2019, Gyro increased mast and tower revenue by 35.4%, mainly from 1 380 multi-tenanted towers, it said on Monday in its annual financial results for the year ended 31 March 2019.

“We are removing redundant equipment from 120 of these towers to make rental space available for new tenancy. We assessed the entire portfolio for suitability of mobile network operator multi-tenancy. As a result, we introduced 2 000 additional towers to potential tenants.”

The company is “aggressively marketing” these sites to major tenants and has received “positive interest”, it said.

The tower portfolio is anchored by Telkom Mobile as it expands its coverage and enhances its 4G network.

“We have a new tower build programme for 2 000 sites over the next three years, underpinned by Telkom Mobile’s demand for new sites. We established supplier panels for site permitting and acquisitions, tower manufacturing and construction for expeditious execution of the build programme. In line with the evolving technology landscape and customer requirements, Gyro has developed a small cell offering for 4G network augmentation and 5G roll-out preparation.”

Gyro will establish adjacent revenue streams from property developments as part of its core objective of unlocking value in the tower and property portfolios, it said.

Revenue jumps

Gyro reported operating revenue of almost R1.2-billion, up 23.8% on last year, driven largely by its tower portfolio. Margin, on an earnings before interest, tax, depreciation and amortisation basis, increased from 33.3% to 58.6% due to the revenue growth and “active cost management”.

Mast and tower revenue rose by 35.4% to R930-million.

The total portfolio consists of 1 332 properties, comprising exchanges and switches, offices, client service centres, learning buildings, radio transmission sites and residential dwellings.

“Gyro focused on optimising the mast and tower portfolio, undertaking development planning for selected properties, and optimising the group’s property-related expenses,” Telkom said. “We established a solid foundation for revenue opportunities and asset value enhancement going forward. The mast and tower portfolio generates the bulk of our external revenue, as external rental income will only be realised as properties are redeveloped.

“We are assessing each of the group’s 1 332 properties to determine the best use. Development planning is under way for selected properties with development potential. We conducted market research for most of the selected properties to identify supportable property segments per site. We continue adding suitable properties to the development pipeline and (will) commence with the re-zoning and development planning process to prepare the properties for redevelopment.”

Telkom plans to consolidate business units into regional offices and warehouses. “This will lead to greater productivity and efficiencies among business units and will optimise occupancy expenses at the regional level.”

The company is decommissioning 62 exchanges that are “no longer fit for operational purpose”, it said.
“We will sell decommissioned properties if they do not meet development criteria or other strategic uses. We continue to aggressively assess buildings and properties in the portfolio to identify assets that are no longer required for operational purposes that we can either redevelop or sell, thereby reducing occupancy costs while generating revenue.”  — © 2019 NewsCentral Media