{"id":631370,"date":"2026-03-02T16:00:33","date_gmt":"2026-03-02T14:00:33","guid":{"rendered":"https:\/\/mybroadband.co.za\/news\/?p=631370"},"modified":"2026-04-09T14:56:26","modified_gmt":"2026-04-09T12:56:26","slug":"state-owned-broadband-company-records-large-losses-and-fails-to-publish-its-annual-report","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/broadband\/631370-state-owned-broadband-company-records-large-losses-and-fails-to-publish-its-annual-report.html","title":{"rendered":"State-owned broadband company reports losses"},"content":{"rendered":"\n
Broadband Infraco has reported consecutive annual losses since 2019. Since 1 April 2020, Broadband Infraco has reported a combined loss of R546 million.<\/p>\n\n\n\n
Its last annual report for the financial year ended 31 March 2024 showed that the failing state-owned enterprise had become technically insolvent, with net equity of -R23.3 million.<\/p>\n\n\n\n
This is despite revenue increasing by over 15% from R471 million to R545 million, and cash and cash equivalents increasing by 125% from R221 million to R496 million.<\/p>\n\n\n\n
At Broadband Infraco\u2019s annual general meeting at the end of February 2025, CEO Gift Zowa assured the company was on track to become a \u201cmore commercially sustainable entity\u201d.<\/p>\n\n\n\n
Broadband Infraco was founded in 2007 to take custodianship of the long-distance national fibre infrastructure originally built by Eskom Enterprises and Transnet.<\/p>\n\n\n\n
Although it has a profit mandate as a Schedule 2 company under the Public Finance Management Act, it has a history of making substantial losses and struggles to fulfil its mandate.<\/p>\n\n\n\n
Since 2007, Broadband Infraco has grown its network to cover all nine provinces in South Africa and extends to the borders of the country\u2019s neighbours.<\/p>\n\n\n\n
It was awarded an Individual Electronic Communications Network Services Licence in 2009, which permits it to operate physical telecommunications infrastructure and sell wholesale services.<\/p>\n\n\n\n
This allowed Infraco to sell high-capacity long-distance transmission services to other licensed fixed and mobile network operators and Internet service providers.<\/p>\n\n\n\n
The company reports to the Department of Communications and Digital Technologies (DCDT) and the Industrial Development Corporation in their capacity as its shareholders.<\/p>\n\n\n\n
Based on information from its latest financial report and corporate profile, the company\u2019s fibre-optic network comprises nearly 15,000km of fibre and 156 points of presence.<\/p>\n\n\n\n
Dire financial situation<\/h2>\n\n\n\n<\/figure>\n\n\n\n
The severity of Broadband Infraco\u2019s financial troubles became clear when the government tabled plans to create a State Digital Infrastructure Company (SDIC) in 2021.<\/p>\n\n\n\n
It was decided that state signal distributor Sentech would buy Broadband Infraco to establish the combined entity. However, the acquisition faced headwinds when Infraco\u2019s solvency and liquidity were tested.<\/p>\n\n\n\n
The due diligence on Infraco found it technically insolvent and that its liquidity ratio was below 1. Therefore, Infraco\u2019s assets are insufficient to cover its long-term liabilities, and it cannot settle its short-term debts.<\/p>\n\n\n\n
Sentech warned that pursuing the acquisition would likely result in severe financial strain on both entities and said it could lead to operational inefficiencies and jeopardise service delivery.<\/p>\n\n\n\n
It also cautioned that Broadband Infraco doesn\u2019t have the capital to realise the growth plans necessary to generate positive cash flows from operations in the near future.<\/p>\n\n\n\n
This dire financial situation resulted from consistent mismanagement at Broadband Infraco, which has failed to turn a profit since 2019.<\/p>\n\n\n\n
In response to recent Parliamentary questions, communications minister Solly Malatsi said that the DCDT holds formal quarterly performance and financial review meetings with Broadband Infraco\u2019s management.<\/p>\n\n\n\n
These are supplemented by monthly financial monitoring of liquidity, going-concern indicators, and progress against the Auditor-General\u2019s audit action plan.<\/p>\n\n\n\n
Specific commitments, such as loss reduction, network stabilisation, and increased utilisation of infrastructure for SA Connect, are tracked, with written feedback and directives issued where performance is off-track.<\/p>\n\n\n\n
SA Connect is a government programme to provide affordable, high-speed, and reliable broadband Internet to all citizens, specifically targeting government facilities and rural and underserved areas.<\/p>\n\n\n\n
\u201cBroadband Infraco has been formally directed to prioritise stringent cost-containment, debt management, and cash-flow improvement measures within its turnaround strategy,\u201d Malatsi said.<\/p>\n\n\n\n
Additionally, both Broadband Infraco and Sentech are still to be \u201crationalised\u201d, with the merger of the two entities intended to reduce costs as additional funding is not available.<\/p>\n\n\n\n
\u201cSteps will be taken in the first quarter of 2026 to appoint a transaction adviser for this purpose,\u201d Malatsi said.<\/p>\n\n\n\n
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