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Investigation into R1.3bn broadband takeover

Staff Writer
By Staff Writer, ITWeb
Johannesburg, 14 Mar 2017
The Joburg Broadband Network aims to connect communities and businesses to more affordable Internet.
The Joburg Broadband Network aims to connect communities and businesses to more affordable Internet.

The DA-led City of Joburg (COJ) has approved a decision to investigate the previous administration's decision to take control of the Johannesburg Broadband Network (JBN) project.

In a statement, COJ executive mayor Herman Mashaba confirmed a thorough investigation will take place as a result of the "astronomical costs" incurred by the city after taking over the project.

"The astronomical losses made in the administration of this project are yet again an indictment on financial management in the city and this cannot be allowed to continue. When the city is facing enormous challenges with a massive infrastructure and service delivery backlogs, one has to question the decision to spend R1.3 billion on such an adventure."

Initiated in 2006, the JBN project aims to provide access to broadband services to improve the city's delivery services, realise ICT-related savings, and provide communities and businesses with more affordable Internet.

The contract to build and operate the 900km broadband network was initially awarded to Ericsson SA; however, the city decided to cancel the contract in 2014, and established a municipal-owned entity, the Metropolitan Trade Company (MTC), to take over the running of its R1.3 billion broadband network.

Under the initial agreement, the city would have paid an annual fee for the building and operation of the network. After 15 years, it would have taken over ownership of the network.

Mashaba said the initial agreement entered into by the city would have come with minimal risk and maintained the city's financial stability. Instead, the city chose to buy out the agreement at a cost of R1.3 billion, without any viable business plans.

According to him, on commencing operations on 30 September 2015, the MTC ended the 2015/16 financial year with a net loss of R54 million.

"Currently, the MTC continues to function with no viable business plan. The auditor general, in his most recent report, raised a number of serious concerns with regard to the financial performance of the MTC."

The decision to institute this investigation will in no way impact the city's current free WiFi programme and intentions to expand it, he concluded.

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