Clock ticking on Broadband Infraco's future

Bonnie Tubbs
By Bonnie Tubbs, ITWeb telecoms editor.
Johannesburg, 24 Jun 2015
There has been talk of a tie-up between Telkom and Broadband Infraco, which remains unconfirmed.
There has been talk of a tie-up between Telkom and Broadband Infraco, which remains unconfirmed.

The future of Broadband Infraco remains unclear, while government is running out of time to define the broadband entity's shaky existence amid the critical rollout of broadband in SA.

The latest uncertainty stems from the Department of Telecommunications and Postal Services' (DTPS') presentation to Parliament's portfolio committee yesterday, in which it put forward its case for a "rationalisation of state-owned enterprises (SOE)" within its mandate.

Reporting to the DTPS are Broadband Infraco, Sentech, the State IT Agency (SITA), the Universal Service and Access Agency of SA, National Electronic Media Institute of SA and the SA Post Office. Government also has a 51% stake in Telkom (39.8% directly and the rest through the Public Investment Corporation) and a 13.9% stake in Vodacom.

The DTPS' SOE rationalisation proposal - which was in response to a Presidential Review Committee (PRC) call - is centred on broadband and the ultimate goal, according to the department, is to "achieve the developmental objectives and aspirations of SA".

President Jacob Zuma announced earlier this year that the implementation of SA Connect - SA's broadband policy - would begin "earnestly" this year, with phase one having already kicked off, in April.

Uncertain entity

Broadband Infraco - an entity that has had its status and future questioned in light of funding issues and government's designation of Telkom as "lead broadband agency" for the implementation of SA Connect - arose as the heart of the SOE discussion.

Democratic Alliance shadow minister of telecoms and postal services, Marian Shinn, was present at the portfolio committee meeting yesterday and says there was no clear vision at the end of it as to what the DTPS was trying to achieve.

"It seemed to want to form a government-operated whole broadband company, which we nipped in the bud."

Ultimately, in terms of the PRC, the DTPS need only focus on the future of Broadband Infraco, says Shinn. "[The DTPS] could give us no view on the plans for that SOE, except that it seems to be in the hands of the Investment Development Corporation (IDC), which is 'looking at its [Infraco's] books'."

There has been speculation government may be mulling a sale or merger of Broadband Infraco, but the DTPS has not confirmed this.

In its presentation, the department said Broadband Infraco had been instructed to "preserve its value" in preparation for the SOE rationalisation. The entity is now reviewing its business and financial plans, it said.

"Engagements are taking place between government and the IDC, as the 26% shareholder in Broadband Infraco, share views on the future of this company."

Shinn says this boils down to "treading water" while government lingers on what to do with Broadband Infraco. "[There is still] no clear idea of what government plans to do with this SOE - and they're running out of time."

Competing companies

DTPS DG Rosey Sekese presented the rationalisation report yesterday, reiterating the PRC's findings that there was "a lot of duplication" within the government portfolio of SOEs, most of which were "characterised by poor governance and a lack of clear understanding of their mandates in the context of a developmental state".

The objectives of SOE rationalisation, she said, included avoiding duplication, minimising the number of SOEs involved in the implementation of broadband and avoiding "undue competition" between SOEs involved in carrying out SA Connect and SA's broadband goals.

"This is based on the erroneous view that [government's] entities compete in broadband rollout," says Shinn. She says, however, all the state's SOEs have different mandates, and state shareholding in Vodacom and Telkom should not entitle government to treat these JSE-listed companies as SOEs that might compete with Broadband Infraco and each other.

ICT expert Adrian Schofield says, understanding that governments are sometimes best placed to provide certain infrastructure and services, it makes sense to have Sentech responsible for signal distribution and to have a SITA that is responsible for a holistic approach to the government's enterprise architecture and acquisition of technology from the private sector - not to build its own solutions.

"It makes sense for government to control the core network that links its locations, although one could argue that this should not necessarily be through ownership. It does not make sense for government to compete with the private sector."