Talks of Broadband Infraco and Telkom Merger
According to an article in Business Day Live state-owned company Broadband Infraco plan’s to merge with Telkom as a part of the government’s restructuring of state entities to remove duplication as well as to prevent erosion of Broadband Infraco’s assets and value.
According to this article the merger involves more than just a collaboration between the two companies but will be a full merger that is expected to take 12-18 months to finalize. Broadband Infraco has a fixed-line footprint of 14 676km and the merger would entail the consolidation of the state’s broadband assets under one umbrella with the aim of forming a national network that would provide wholesale services on an open-access basis through a state-owned company.
The government holds a direct stake in the company of about 74% and the company was originally developed to create a national telecoms backbone to compete with Telkom but the company has struggled to turn a profit for many years now.
According to various sources including Business Day Live, the rationalization is said to be urgent for Broadband Infraco due to it having made significant losses and having submitted its financials 6 months late for the last financial year due to the company’s “going-concern” risk. The company made a loss of R245m in the 2014-15 financial year compared to the previous year’s loss of R144m and only increased its revenue from R302m to R306m.