Broadband Infraco to address cash position

The Department of Public Enterprises and state owned enterprise (SOE), Broadband Infraco, are working on a “detailed funding plan” which aims to address the current cash position of the company, according to Public Enterprises Minister Malusi Gigaba.

Presenting his budget vote speech in Parliament on Wednesday (16 May), Gigaba said that over the MTEF (medium-term expenditure framework) period, Infraco’s capital expenditure budget is around R3.1 billion, with R780m budgeted for the 2012/13 financial year. “Infraco is now well-positioned to assume its role as a major player in the ICT sector,” he said.

Broadband Infraco received funding of R138.6 million (2010: R208.5 million) from the Department of Public Enterprises (DPE) during the 2011 financial year. This increased the Government’s total equity funding contribution to an amount of R1.351 billion which represents an investment in Broadband Infraco of 74%.

The group said that the Industrial Development Corporation (IDC) contributed funds of R48.7 million in 2011, bringing its total equity funding contribution to R474.7 million to maintain a 26% investment in the ICT company.

“Over the last year, the Department has focused on bringing stability to Broadband Infraco’s management, Board and business processes. Key appointments, including that of CEO, have been made, the audit of problem areas has been finalised and remedial actions taken,” Gigaba told Parliament.

CEO, Puleng Sejanamane, was appointed in April.

“I am pleased to announce that the West Africa Cable System (WACS) international connectivity became operational on 11 May 2012, thus increasing bandwidth capacity, providing for improved integration of the 10 African countries that are customers of WACS, and enabling the further reduction of the cost to communicate,” the minister said on Wednesday.

Broadband Infraco has invested at the highest possible level in WACS which is a Tier 1 investment, thereby entitling this company to a 11.4% of the total capacity on the WACS system.

It said that 70% of the Broadband Infraco owned WACS capacity will be dedicated towards projects of key national interest and the remainder will be dedicated towards supporting other  government projects that require international capacity and including ensuring commercial availability of capacity to other telecommunications operators who require wholesale capacity.

“As a carrier of carriers, Infraco will work aggressively to promote competition in the services sector by making critical infrastructure available to Electronic Communication Services licensees.

“Further, as a wholesaler of ICT infrastructure, Infraco is well positioned to house and administer the scarce radio frequency spectrum currently under discussion.

“For interventions such as Infraco to succeed, it is necessary that government and its agencies be enlisted as major tenants on its network in order to enable the roll-out of the e-governance strategy and extend broadband infrastructure to under-serviced areas,” Gigaba said.

For the financial year ending 2011, Infraco announced operating revenue of R390.7 million, below the total budgeted revenue of R412.8 million.

Earnings before interest, tax, depreciation and amortisation (EBITDA) for the 2011 financial year showed a loss of R94.3 million, adding to the R9.7 million loss in 2010.

The group posted an after taxation loss of R206.9 million.

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Broadband Infraco to address cash position