Industry expert Rabelani Dagada suggests that government is considering the sale of its broadband company, Broadband Infraco.
Dagada, who is a DA spokesperson on the Joburg Broadband Network Project said: “There are murmurings in the ICT sector that even the national government is considering selling their own broadband company… due to intense competition.”
Infraco is seen a key player in government’s quest to provide broadband access and connectivity to underdeveloped and under-serviced areas and a key driver to economic growth through increased broadband penetration.
The company had to delay the submission of its annual financial report in September due to a ‘technical matter’ following the establishment of the new Department of Telecommunications and Postal Services (DTPS) and the transfer of Broadband Infraco to the new Department.
Telecoms minister Siyabonga Cwele has since dithered in announcing a way forward for the group.
In October Infraco reported a 27% rise in revenue for the year ended 31 March 2014, to R302.4 million.
However, the company again reported an operating loss of R143 million, better than a R175 million loss in 2013, and a a R95 million loss in 2012.
CEO Puleng Kwele has told BusinessTech in the past that the company does not expect to turn a profit anytime soon, due to its mandate.
Kwele estimated that the South African government will need to set aside as much as R100 billion in order to meet its targets for broadband coverage.
According to Dagada, there is little space in the current broadband market for a company like Broadband Infraco.
To its credit, the company already has an extensive network of 14,000 km of fibre, 151 customer termination points, traversing all nine provinces, most major cities and towns.
Broadband Infraco is also a tier 1 investor in the West African Cable System (WACS).
Telkom is government’s top-dog
President Jacob Zuma announced during his State of the Nation address that 2015 will mark the beginning of the first phase of the South African government’s broadband roll-out initiative.
Telkom has been designated as the lead agency to assist with the roll-out.
The initial phase of the government’s broadband roll-out will encompass offices in 8 district municipalities, Zuma said.
DA leader, Helen Zille, expressed shock at the announcement, saying that in open competition Telkom is beaten by “several other service providers.”
Zille accused the group of insider trading, saying access to privileged information allowed it to boost up its share price.
It has been reported that Government is mulling the sale of its stake in Telkom and Vodacom to fund its bailout of ailing power supplier, Eskom.
“Broadband Infraco is not aware of the consideration of the sale as mentioned in your mail. We are delivering connectivity to our customers and our operations are running business as usual,” the company told BusinessTech.
The Department of Telecommunications and Postal Services did not respond to queries by the time of publication.