Operating revenue for Broadband Infraco for the 2009/10 financial year was R317.5 million compared with R227 million previously, the state-owned broadband wholesaler stated in its latest annual report.
Those numbers exclude the charge of R11.1 million (compared with R46.7 million in the 2008/9 financial year) that has been accrued to recognise the straightening of operating lease income over the period of the lease agreement with Neotel.
Broadband Infraco stated in its annual report, which still has to be formally presented to Parliament's Public Enterprises Oversight Committee, that the lease with Neotel has now come to an end.
The company said the operating revenue for the 2009/10 year was R16.5 million below the budgeted R334 million due to the budgeted incremental revenue from the South African Research Network (Sanren) and the wholesale market that was not realised during the year.
Sanren, which is a network primarily catering for the country's academic and research institutions, decided towards the end of 2010 to award its contract - valued at about R80 million - to Telkom.
Expenditure rise
Expenditure increased to R407.4 million, from R372.8 million, mainly due to the cost of network operations, maintenance and repairs.
Earnings before interest, tax, depreciation and amortisation for the 2009/10 financial year were a negative R9.7 million, compared with R53.1 million. An after-tax loss of R28.3 million was posted and the operating loss (inclusive of depreciation) was R101 million, compared with R46.3 million previously.
The actual operating loss and after-taxation loss for 2010 were significantly better than the budgeted amounts of R160 million (2009 R181.5 million) and R254.9 million, respectively.
“It is typical for new start-up telecommunications entities to experience negative operating results for the first three to five years of operations. We're, therefore, satisfied with the financial performance of the company for the period under review, because the financial results achieved are ahead of the annual budget and the projections provided in the three-year business plan,” Broadband Infraco chairman Andrew Mthembu and CEO Dave Smith wrote jointly in the annual report.
Broadband Infraco was established just under two years ago with the aim of improving market efficiency in the long-distance market segment.
Telecommunications regulator, the Independent Communications Authority of SA (ICASA), awarded it an individual-electronic communications network service licence at the beginning of this year, which allows it to operate and build its own network.
However, ICASA refused it an individual-electronic communications services (I-ECS) licence that would have allowed Broadband Infraco to supply services over this network.
ICASA refusal
“Broadband Infraco is not in agreement with the [ICASA] resolution taken with regards to the I-ECS licence application and the reasons given by ICASA. Broadband Infraco assessed the impact of not being awarded the I-ECS licence and we wish to report that the most significant impact is in the area of ensuring connectivity services for the projects of national interest in accordance with the remaining element of the Broadband Infraco mandate,” Mthembu and Smith state in the report.
During the 2009/10 financial year, Broadband Infraco received funding of R208 million (R377 million) from the Department of Public Enterprises. This increased government's total equity funding contribution to R1.213 billion (R1.004 billion), which represents a shareholding of 74%.
The Industrial Development Corporation contributed funding of R73 million (R353 million), bringing its equity to R426 million to retain its 26% shareholding.
Approximately 87% of the funding was used to fund network capital expenditure, the annual report states.
Broadband Infraco's stake in the West African Cable System was diluted from 12% to 11.4%, in order to accommodate an additional member to the consortium, namely the Democratic Republic of Congo's Department of Posts and Telecommunications.
Other members of the consortium include Telkom, Vodacom, MTN and Neotel.
Share
