The state-owned entity meant to drive the government’s SA Connect programme is hamstrung by debt and struggling to deliver services.
CAPE TOWN – The state-owned entity meant to drive the government’s SA Connect programme is hamstrung by debt and struggling to deliver services.
Broadband Infraco (BBI) has become another struggling SOE in the Communications and Digital Technologies Department as it battles to pay its creditors and deliver services, MPs heard.
BBI, entrusted with ensuring better connectivity in poor communities, can’t fund its own operations and has turned to capital markets to ask for loans.
The company is meant to drive SA Connect, which was first announced by the government in 2013 as the national broadband project that would meet the technology goals of the National Development Plan to create a society where information was easily available.
The company’s officials told MPs that relations between officials at the company and Eskom Communications soured because of the debt.
The officials said BBI owed Telkom, Eskom and Transnet, among others, money but didn’t present the debt figures.
Communications and Digital Technologies Deputy Minister Philly Mapulane said they had been “worried” about BBI’s low cash flow levels, “which really is affecting the financial viability of the entity”.
He said in an attempt to remedy the situation, shareholder loans had been converted into equity, which would make it easier for the company to borrow from banks.
A shareholder loan is alternative financing a company can access when it can’t secure bank loans.
Mapulane said this would allow BBI to invest money in its operations.
“There are a number of creditors, in particular Telkom and Transnet, whom we have been dealing with to try to resolve some of the issues regarding the debt owed to them,” he said.
He said BBI was “bleeding money” and had racked up a net loss of R118 million.
Mapulane said his political superior, Khumbudzo Ntshavheni, and Public Enterprises Minister Pravin Gordhan were in talks about the company’s debt.
BBI board chairperson Zandile Kapini told MPs that the company had achieved 14 of its 19 targets, with the missed targets relating to BBI’s financial sustainability. One missed target pertained to socio-economic transformation.
She said the company was financially “unstable”.
