The delay in appointing the second national fixed-line telephone network operator has had a negative impact on Eskom Enterprises, whose net operating income for the year to December fell 36% to R83 million.
This is despite the achievement of a 23% increase in sales, which exceeded by far the targeted 15% mark.
The company`s core lines of business are infrastructure development, energy business operations, specialised energy services and IT and telecommunications.
"Eskom Enterprises also achieved its 40% external sales target, indicating its established commitment as an operating company in Africa," says CEO Enos Banda.
"The company has presence in more than 30 African countries and is serious about participating in project activity across the continent. The projects range from seawater intake in Libya, electrification contracts in Zambia, to a mobile telecommunications network company in Lesotho and others."
The start of the Lesotho mobile telecommunication operation resulted in a R29 million loss, which Banda says is expected for the first year of operation due to high costs associated with business infrastructure development. Significant revenue and profit are expected for the company in the current year.
Banda says Eskom Enterprises made significant investment in telecommunications during the year, although the longer than expected delays in the second national operator (SNO) licensing had a negative effect on profitability.
He says the company has shown its ability to grow its current business organically, but massive investment will be required to achieve strategic growth targets.
"As a consequence, it is regrettable that Eskom Enterprises` fibre optic infrastructure cannot be put to early use."
Eskom, Transnet and empowerment group Nexus Connexion have together been allocated 49% of the SNO. Eskom and Transnet, in the form of their respective subsidiaries Esi-Tel and Transtel, are to hold a combined 30%.
Eskom Enterprises chairman Thulani Gcabashe says Eskom remains committed to the SNO. The operator has huge upside potential but has required substantial capital investment and long-term commitment. As with all new ventures, it is attended by high risk, he says.
Banda says the fall in net operating income is a short-term decline in profitability and results from management`s determination to sacrifice short-term performance in the interests of longer-term strategic goals.
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