Broadband Infraco appeals for govt bailout

23 Sep 2015

South African state-owned fibre-optic infrastructure provider Broadband Infraco has appealed to the government for an urgent cash bailout of ZAR243 million (USD17.7 million) in order to continue its operations, in addition to a further ZAR932 million in funding until 2019, TechCentral reports. However, the new request is not likely to be successful, as the state has already injected ZAR1.8 billion in the enterprise, which had posted profit (of ZAR22.6 million) in only the first year of its operations (2008). Since 2012, Broadband Infraco has made several unsuccessful submissions to the state for funding of ZAR3.4 billion, ZAR2.6 billon, ZAR170 million and ZAR528 million. Sibongile Makopi, deputy director-general for state-owned companies’ oversight, noted: ‘Broadband Infraco has sustained persistent losses in its history, and has an obsolete network infrastructure … Indirectly, if the government gives these money allocations and guarantees, it will be subsidising the commercial contracts that Broadband Infraco has.’

TeleGeography notes that Broadband Infraco, which manages infrastructure rollouts to underserved areas on behalf of the government, is owned by the Department of Telecommunications and Postal Services (formerly known as the Department of Communications [DoC]) (74%) and the Industrial Development Corporation. In June 2015 the struggling company was directed by the DTPS to undertake a valuation exercise in preparation for its possible sale.