Broadband Infraco boost
State-owned Broadband Infraco, which has operated under its new name for the last eight months, posted an operating profit of R18.7 million for 2007/08 but would have reported a R35.6 million operating loss if interest income of R61.4 million was not included, chairman Andrew Mthembu and acting chief executive David Smith have reported to parliament.
In their annual report, tabled at parliament this week, the two executives said Eskom Enterprises had received R627 million funding from the department of public enterprises on behalf of Broadband Infraco at the start of the financial year.
"This funding was designated for the acquisition of the original long-distance network assets developed by Eskom Enterprises and Transnet as well as the completion, operationalisation and expansion of these assets," they said.
Network infrastructure rental services earned R58 million, while operating costs increased to R93.7 million due to the cost of network operations, maintenance and repairs.
They reported that Broadband Infraco had commenced with debt raising activities and although significant progress had been made, the debt facility would be finalised only during 2008/09.
An agreement came into effect in December providing Neotel the right to use Broadband Infraco’s long distance network infrastructure until Broadband Infraco is licensed.
The executives said its network infrastructure now had 11 500 kilometres of optical links and 135 long distance sites.
The company is working on a cable project on the African west coast.
Broadband Infraco has its roots in a dormant subsidiary of Eskom Enterprises. A sale agreement between the public enterprises minister and Eskom Enterprises led to the transfer of Broadband Infraco to the government. The Broadband Infraco Act came into effect on February 1, making it a state-owned enterprise.
Mthembu and Smith reported that the start-up entity did not have fully developed business processes, organisational controls or governance practices of its own. During the last financial year, it applied the Eskom Enterprises corporate governance processes to its business activities, "most notably in the areas of procurement and financial controls".
Business Report
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