Why Should South Africa’s Telkom List on the JSE its Real Estate Worth Billions?

Telkom has one of South Africa’s biggest real-estate portfolio that started being acquired under the brutal, apartheid state machinery

South Africa’s Telkom should just start a process to become a real estate landlord and float its property portfolio on the Johannesburg Stock Exchange.

This will create value not only for Telkom but its shareholders, workers, and potential property partners.

I know in the past have propagated for Telkom to consider selling its property portfolio. For more read: Telkom’s Property Poser

However, since Telkom executive – under the great leadership of its boss Sipho Maseko – has managed to reshape the telco into a possible giant to conquer several areas in our vast telecommunications and communications industry, it’s time to rethink the strategy.

Floating on the JSE of Telkom’s real estate could generate much-needed value for Africa’s largest fixed-line telephone group and enable it to diversify its revenue away from telecommunications services and solutions.

Telkom’s property portfolio rose through various purchases throughout its long history, which goes back to its role as part of the old apartheid South Africa’s postal services. The company has already unlocked financial value through the migration of its head office from Tshwane Central to a new campus in Centurion.

To float a property portfolio will be very easy for Telkom now after the telco announced on Monday that it has created a separate and wholly-owned subsidiary to focus on its bigger property assets, known as Gyro.

The company said the move to create Gyro is to unlock value through commercialising property portfolio by extracting value from excess building capacity.

A move to list on a JSE a real estate portfolio will enable Telkom to diversify its income into the profitable property market.

When asked on Monday at the company’s financial results presentation about the size of Telkom’s property portfolio, Maseko was economical with the truth and didn’t want to disclose the size of the asset.

“It’s material and attractive enough. It’s valuable enough for us to do something. It’s attractive enough for us to say: is there a way in which to we can involve a right partnership with a right people, we can be able to enhance the value of this real estate. I think to get it through (get approval) from our board and for us as a team to get a right consensus,” says Maseko.

“The value proposition is very, very clear. But I think we are at a probably at a beginning of that process. Therefore, we want to give ourselves time, so that are able to give you something to stand behind and improve going forward.”