State-owned fibre-optic infrastructure company, Broadband Infraco, could be on Vodacom's acquisition wish list ? should it come up for sale.
Responding to questions from ITWeb, Vodacom CEO Shameel Joosub indicated that acquiring an asset like Broadband Infraco was certainly on the company's radar, especially after it had to call off its R7 billion bid to buy Neotel last month.
"When our proposed acquisition of Neotel lapsed earlier this year, we said our ambition to increase the rollout of fibre-based broadband services to customers remains and that we will continue to look for opportunities to accelerate our fixed-line business," says Joosub.
"Acquiring an asset like Broadband Infraco would help achieve this and would be supportive of government's Broadband 2020 vision of universal broadband access by local households."
There is no indication Broadband Infraco, which is 74% government owned, is up for sale but Joosub is calling for a "transparent, fair and open process", saying this would be the best way to determine Broadband Infraco's value.
"Vodacom fully supports any position that promotes a transparent, fair and competitive process on the Broadband Infraco matter. We believe this approach would be in the best interests of the sustainability of the industry," he adds.
Broadband Infraco acts as the state's wholesale broadband arm and is supposed to aid in government's large-scale broadband infrastructure rollout plans (SA Connect), to provide 90% of South Africans with broadband by 2020.
Financial troubles
Over the past few years, Broadband Infraco has remained in a precarious financial state and has struggled to fulfil its mandate.
According to the company's integrated report for 2015, it made a loss of R244.6 million for the year ended 31 March 2015. This was a more than R100 million increase on the previous year's loss of R143.4 million.
The report shows Broadband Infraco's assets to be worth around R1.75 billion.
In September last year, National Treasury confirmed it was considering a request by Broadband Infraco for a going concern guarantee of R243 million.
The company, which falls under the Department of Telecommunications and Postal Services, has already received R1.8 billion from government to date.
At the time, a meeting of the parliamentary portfolio committee for telecommunications and postal services revealed Broadband Infraco was seeking the R243 million cash injection, as well as a further R932 million in funding until 2019.
National Treasury's 2016 Budget Review, published on 24 February, indicated a series of public-sector reforms were already under way "to reduce state participation in sectors where several entities operate with overlapping mandates".
"This is already under way in the information and communication technology sector with the rationalisation of Broadband Infraco. The state intends to dispose of holdings in non-strategic assets, as needed, to direct resources to areas critical for development," the treasury report reads.
This is in line with president Jacob Zuma's State of the Nation Address, where he noted government was looking to phase out state-owned enterprises (SEOs) that are no longer active and not speaking to the country's development agenda.
Merger talk
Earlier this year, speculation began that a merger between Telkom and Broadband Infraco was on the cards, as part of government's SOE restructuring goals.
However, Telkom and Broadband Infraco were tight-lipped on any possible deal.
"We are always looking for ways to best collaborate within the industry but importantly, any such collaboration would have to be in a manner that added value to the business," Telkom's managing executive for group communications, Jacqui O'Sullivan, told ITWeb in February.
Broadband Infraco spokesperson Sammy Mafu said at the time that the company "engages the entire market" on possible infrastructure collaboration "on an ongoing basis".
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