The cabinet last week said the creation of the mooted company “will facilitate the rollout of the interdependent elements in a co-ordinated manner and create a national broadband champion”.
However, the official opposition party has said that the move would cost the country billions.
Marian Shinn, the DA’s spokesperson on telecommunications and postal services, said the creation of the mooted company would further delay the much-needed rollout of broadband connectivity.
“BMI-TechKnowledge, which has extensively researched and costed SA Connect’s requirements, estimates the capital funding needed for this merger at between R32.9billion and R84.9bn, depending on the technology used. Operational costs were calculated at between R54.8million and R116.4m,” Shinn said.
Broadband Infraco is the country’s second-largest fixed-line operator after Telkom, while Sentech has wireless broadband assets. and operates signals for South Africa’s broadcasting companies.
Broadband Infraco has recently appointed a new chief executive and chief financial officer.
The Minister of Telecommunications and Postal Services, Siyabonga Cwele, in his budget vote speech earlier this year, highlighted the role played by the two state-owned enterprises.
“In the last financial year, Broadband Infraco expanded its network to more than 14900km of fibre. It optimised 41 points of presence to enable third parties to access its network.
“Sentech is one of our best-managed entities with unqualified audits,” Cwele said
“However, its going concern is being threatened by the broadcasters that are experiencing funding challenges and defaulting on paying for Sentech services. We appeal to broadcasters to make efforts to resolve this debt.”
The merger of the two companies has been in the pipeline for several years now.
In 2011, the then minister of public enterprises, Malusi Gigaba, confirmed that discussions were being held between him and the then minister of communications, Roy Padayachie, on exploring potential synergies between Broadband Infraco and Sentech.
Arthur Goldstuck, the managing director of World Wide Worx, has previously questioned whether the merger of the two entities would succeed.
“These are both entities that have proved themselves ineffectual in a broadband environment, so combining the two would simply multiply the problems rather than resolve them,” Goldstuck said.
- BUSINESS REPORT