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Timeline for state’s digital infrastructure firm still unclear

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
Johannesburg, 08 Apr 2024
Philly Mapulane, deputy minister in the Department of Communications and Digital Technologies.
Philly Mapulane, deputy minister in the Department of Communications and Digital Technologies.

Despite the Department of Communications and Digital Technologies’ (DCDT’s) recent assertions that the Broadband Infraco (BBI) and Sentech merger is still on the cards, government doesn’t expect this to be concluded by the end of the current administration.

This came to light during the DCDT’s media briefing last week, which focused on the performance of the ministry and its entities.

State-owned signal distributor Sentech will take charge of wholesale infrastructure provider BBI by means of an acquisition, resulting in the formation of a State Digital Infrastructure Company. The entity’s creation falls within the government’s mandate to consolidate state-owned companies that operate within similar environments.

Speaking at the briefing, DCDT deputy minister Philly Mapulane said the ministry doesn’t anticipate the acquisition or merger will take before the end of this administration, following the 29 May elections.

“We have been advocating for the establishment of the State Digital Infrastructure Company, which will consolidate the digital infrastructure assets of the state into one company,” said Mapulane.

“In line with our next-generation spectrum policy, we are suggesting – as part of the spectrum reforms – that we allocate some of the spectrum to this digital infrastructure company, so that it can roll out the infrastructure and assist SMMEs with last mile connectivity.

“We are on course in-as-far-as establishing the State Digital Infrastructure Company. However, the merger between BBI and Sentech has unfortunately been delayed by a number of technical aspects because some of the assumptions that we made at the beginning of the merger are no longer there currently, from a financial perspective, and others.”

South Africa has more than 700 state-owned entities, with most of them suffering mismanagement and poor governance, as depicted by the state of Eskom, Transnet, and the South African Post Office, to name a few.

Given government’s troubled track record with state-run entities, ICT pundits have also questioned whether the country needs a company of this magnitude within the ICT sector.

Despite this, the DCDT put forward plans to establish a digital infrastructure company, backed by the current communications minister’s predecessors, including Stella Ndabeni-Abrahams and Dr Siyabonga Cwele.

In the 2020 National Budget, it was revealed the DCDT would submit to Cabinet the Bill motivating for the establishment of the state-owned digital infrastructure entity.

Later that year, the department indicated the business case for the merger of Sentech and BBI had been finalised, and was awaiting Cabinet and Parliament processes.

In 2021, it was revealed that a new proposal was being considered to facilitate the process of having one state infrastructure company. At the time, the DCDT said a process that would potentially see Sentech acquire BBI was on the table.

In December 2022, the then communications minister Khumbudzo Ntshavheni said government’s plans for the merger had reached an advanced stage, slating April 2023 as the date when the company will be established.

However, Ntshavheni was reshuffled to her current role as minister in the Presidency, making way for Mondli Gungubele to head up the department and oversee the merger as envisaged.