Sentech, Broadband Infraco merger back on the table?

21 Sep 2011

According to TechCentral, South Africa’s public enterprises minister Malusi Gigaba has in part, substantiated long-standing rumours that state-owned enterprises (SOEs) Sentech and Broadband Infraco could be merged, whilst admitting that nothing is imminent. Over the last twelve months, speculation has been rife that the two companies are poised for some kind of operational tie-up. In addition to providing broadcast signal distribution services, Sentech is keen to roll out a WiMAX network in rural areas, using frequency allocations in the 2.6GHz and 3.5GHz spectrum bands that were previously utilised by its ill-fated ‘MyWireless’ venture. Meanwhile, Broadband Infraco was formed by the government to combine the telecoms assets of utilities providers Eskom and Transtel, with a view to building out new fibre-optic infrastructure which will eventually supersede Telkom South Africa’s copper networks as the state’s backbone network.

Gigaba commented: ‘It would be the culmination of a process. We have begun discussions at ministerial, director-general and board levels to try to find the synergies to improve cooperation between the two organisations, through entering into a venture agreement. At one stage or another, depending on the programme we establish and follow, we might arrive at a point where we say both organisations need to merge to form one organisation’. However, at present, Sentech reports to the Department of Communications (DoC), whilst Broadband Infraco is answerable to the Department of Public Enterprise (DPE), potentially complicating any attempts at formal cooperation. Gigaba explained: ‘[They are] not the same types of organisations; [Sentech] gets its budget from the government, and Broadband Infraco raises its own resources to support its programmes’. TeleGeography notes that both operators have been plagued with troubles in recent years – ranging from allegations of internal corruption to mismanagement of government funding – prompting industry insiders to speculate that any kind of tie-up between the two entities is liable to multiply any problems, rather than solve them.

South Africa, Broadband Infraco, Sentech