The Industrial Development Corporation (IDC) has committed R500 million for an effective 25% stake in Broadband Infraco, the new state-owned enterprise earmarked to roll-out cheap broadband, IDC public private partnership head Lindi Toyi says.
She says the investment is directly into Broadband Infraco itself and not specifically aimed at the African West Coast Submarine Cable that the state-owned enterprise wants funded and operational by May 2010.
"Our objective here is to develop cheap telecommunications access for the good of the country and if a business case makes sense to us, we will fund it," Toyi says.
She says the IDC has realised that this is a long-term investment and so has not put any time limit on it.
"This is an infrastructure development within a regulated industry and we know we need to take a long-term view," Toyi says.
She would not directly comment on funding requests being made by other potential undersea cable operators such as Seacom, Uhurunet (sponsored by the Department of Communications) and Eassy (The East African Submarine System), which has Telkom as a shareholder.
"Our funding is based on a principle of non-exclusivity - meaning that if someone has a competing product or service to one that we have already invested in, we will also invest in that if it makes economic sense," Toyi says.
Broadband Infraco has been classified as a Schedule 2 company in terms of the Public Finance and Management Act, meaning that it is able to raise funds on the money markets when it sees fit.
Currently, it is unclear if the IDC investment is a departure from the Department of Public Enterprises statement that Broadband Infraco would be 100% state-owned following its failure to sell a stake to international telecommunications group VSNL, which is the major shareholder in Neotel.
Related stories:
Infraco stays 100% state-owned
Infraco gets private sector partners
R5bn for West Coast sub cable