Grace Ashiru
Telkom has paused the sale of Openserve, indicating a reconsideration of its approach to managing assets. Retaining Openserve could have implications for Telkom’s financial framework while presenting opportunities to capitalise on South Africa’s growing demand for broadband services.
This move highlights Telkom’s dedication to improving connectivity solutions and addressing the ever-changing requirements of the telecommunications sector.
Telkom’s decision to halt the sale of Openserve, its wholesale and network division, signifies a notable shift in its approach to asset optimisation. Instead of pursuing the immediate financial benefits of divestiture, Telkom has opted to retain Openserve, reflecting a strategic focus on long-term growth within its core network infrastructure.
In March 2024, the company took a different approach by selling its Swiftnet masts and towers business for R6.75 billion ($355.4 million) to a consortium led by Actis and Royal Bafokeng Holdings. This move was part of a broader effort to improve liquidity and reduce debt. However, Telkom’s recent decision to withdraw Openserve from the market marks a departure from its asset-light strategy.
Openserve, as a critical provider of broadband infrastructure across South Africa, holds a pivotal role in the telecom sector. By choosing to retain this division, Telkom appears to be recalibrating its priorities, aiming to fortify its position in South Africa’s telecom infrastructure while potentially redefining its long-term business goals.
Financially, the decision to retain Openserve presents a blend of potential benefits and challenges for Telkom. On one hand, the company forgoes the immediate liquidity that a sale could have generated, which might have bolstered its financial position in the short term. On the other hand, by holding onto these valuable network assets, Telkom positions itself to benefit from future revenue growth opportunities.
As the demand for high-speed connectivity continues to rise across South Africa, Telkom can capitalise on Openserve’s extensive network infrastructure to deliver expanded data services. This aligns with a rapidly growing revenue stream tied to the increasing adoption of broadband services nationwide. Moreover, by retaining ownership of Openserve, Telkom gains the ability to maintain tighter control over key aspects of its operations, including managing costs, enhancing service quality, and implementing new technologies. These advantages may strengthen Telkom’s competitive position in the evolving telecom landscape while supporting its long-term growth ambitions.
Operationally, retaining Openserve could significantly enhance Telkom’s ability to roll out high-speed fibre and 5G infrastructure, better positioning the company to meet South Africa’s escalating digital demands. By keeping control of its network assets, Telkom ensures greater reliability in service delivery and can scale its connectivity offerings more efficiently, supporting the country’s growing reliance on robust digital infrastructure.
This decision also contrasts with prevailing regional trends, where many African telecom operators have been divesting non-core assets to streamline operations and concentrate on service delivery. Telkom’s choice to retain Openserve signals confidence in the strategic importance of owning and controlling its core network infrastructure. This move may challenge conventional industry practices and inspire other African telecom operators to reconsider asset retention, especially as the continent’s need for broadband and data services continues to expand.
Ultimately, Telkom’s decision underscores a broader shift in its approach to asset management and future growth planning. By maintaining Openserve, the company aligns itself with South Africa’s evolving digital landscape, emphasising resilience and aiming for sustained growth in a market increasingly defined by connectivity demands.
