South Africa to mull state internet company merger

Published Jul 14, 2017

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Johannesburg - South

Africa is considering a merger of

state-owned technology companies Broadband Infraco and Sentech to help to

accelerate the rollout of high-speed internet to the population within three

years, according to two people familiar with the matter.

The combined entity will be expected to extend broadband to

rural communities that don’t yet have access, said the people, who asked not to

be identified as the plans haven’t been publicly announced. Broadband Infraco

is the country’s second-largest fixed-line operator after Telkom SA SOC, while

Sentech has wireless broadband assets and operates signals for South Africa’s

broadcasting companies.

The government is “pursuing the rationalization of state

broadband assets to reduce the duplication of infrastructure and mandates of

state-owned companies,” Siyabulela Qoza, a spokesman for the Telecommunications

Ministry, said in emailed comments on Thursday. “It will help to fast track the

expansion of access to modern communications infrastructure and services to

more South Africans.”

“We are not in the position to provide information,” Sentech

spokeswoman Milisa Kentane said in an emailed response to questions. Broadband

Infraco didn’t respond to a request for comment.

Read also:   Bain to pilot SAA, Mango merger 

South Africa’s

telecommunications industry regulator announced the auction of new broadband

spectrum last year to address a shortage of high-speed internet in Africa’s most-industrialized economy, although the move

was later opposed by the Telecommunications Ministry and the two parties have

been unable to reach a compromise. Wireless carriers including Vodacom Group

Ltd. and MTN Group are seeking spectrum to boost revenue from internet and data

services as voice sales decline.

South Africa

is one of the world’s stragglers in internet access with just 2.63 fixed-line

broadband subscribers per 100 people in 2015 compared with 12.25 in Brazil and 30.66 in Japan, according to figures

compiled by the World Bank.

Talks between Telkom and the government about buying

Broadband Infraco fell apart last year when no agreement could be reached on

price. Vodacom, the leader in the South African mobile market, has also

expressed an interest in the company in its search for additional spectrum.

The Telecommunications Ministry must start the first phase

of its broadband program by August and begin spectrum licensing by

December, Finance Minister Malusi Gigaba said on Thursday when he announced

a 14-point plan to pull the economy out of a recession.

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