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Broadband Infraco reports solid performance

Martin Czernowalow
By Martin Czernowalow, Contributor.
Johannesburg, 14 Oct 2014
Telecoms and postal services minister Siyabonga Cwele says the private sector will be encouraged to invest in the state's infrastructure development drive.
Telecoms and postal services minister Siyabonga Cwele says the private sector will be encouraged to invest in the state's infrastructure development drive.

State-owned backhaul capacity provider Broadband Infraco reported its strongest financial performance ever, and also marked its official move to minister Siyabonga Cwele's Department of Telecommunications and Postal Services (DTPS).

Holding its annual general meeting in Pretoria, on Tuesday afternoon, the company reported a 27.4% jump in revenue for the year ended 31 March, to R302.4 million, and a 55.5% increase in earnings before interest, tax, depreciation and amortisation (EBIDTA), to R36.1 million.

It also reported a positive cash flow of R328.7 million, which was generated from operations, and a reduced cost of sales to R153 million, 11.1% lower than the previous year's R172.2 million. Gross profit for the year was positive, at R149.3 million, a year-on-year improvement of R84.2 million.

The company said operating costs increased by 19%, to R312.4 million, and operating loss decreased from R175 million to R143 million.

Addressing journalists after the AGM, Cwele praised the company's solid performance and welcomed it into the fold of the DTPS - until now, Broadband Infraco fell under the auspices of the Department of Public Enterprises. But Cwele said further strengthening of the company's future financials is expected, as it, alongside other state-owned entities, would be expected to bolster the country's access infrastructure.

Cwele noted government is in talks with various stated-owned enterprises, including Sentech and the Universal Service Access Agency of SA, to set targets for infrastructure development, and to see "how best they could co-operate" and work towards bridging the digital divide.

Private sector cash

However, given the government's limited resources, Cwele said the private sector would also be encouraged to invest in the state-driven infrastructure development initiative to increase access.

During the last financial year, Broadband Infraco also finalised the sale of 69.9% of WACS capacity to the Council for Scientific and Industrial Research. It also concluded a major backhaul contract with Cell C, which has become Broadband Infraco's second anchor client, alongside the State IT Agency.

CEO Puleng Kwele noted Broadband Infraco has expanded national connectivity, by boosting the Northern Ring - providing DWDM services in the northern part of SA - which was upgraded to a capacity of 480Gbps.

She expects the company's strong financial performance to continue, and anticipates it to turn EBIDTA-positive within two years. In the last financial year, the company diversified from a total of four clients to 15, Kwele noted, adding it had met 96% of shareholder targets.

"We refurbished 40% of our transmission network," she said, noting Broadband Infraco also added five access points-of-presence in the Golden Triangle. During the year, the company also completed connectivity to Botswana's Bofinet - the Broadband Infraco equivalent in that country.

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