Deputy Minister of Public Enterprises, Bulelani Gratitude: Speaking Notes for Broadband Infraco Media Briefing (08 August 2013).
Background remarks and context
Broadband Infraco is a company formed to specifically assist the country to meet its broadband infrastructure needs.
In the year under review, it has continued to experience the strain of being a relatively young company.
At inception, the company was modeled to support the establishment of a second network operator.
It has acquitted itself in this regard. It is now open to offer capacity to all other operators.
We have now began our efforts to ensure that BBI plays its role as a common carrier to the fullest.
We have requested the management and the board of BBI to look at the refurbishment of the infrastructure and to expand it to meet the needs of the operators and Inrernet
Service Providers (ISPs) who wish to use its network.
The upgrade and refurbishment of infrastructure cannot take place in a vacuum. We have challenged BBI to develop a more robust business strategy and plan to capture its share of the market.
We expect that the infrastructure will be upgraded and developed according to the current and future demands of the ICT market, in this case, the operators and the ISPs.
There is no reason why BBI should not be able to provide operators with the requisite technical service levels and associated redundancy capacity.
Of course, the upgrade and refurbishment of BBI’s infrastructure will require funding.
Such funding must be justified by demand and demonstrable revenues to be earned by such upgraded and expanded infrastructure.
We urge the management and board of BBI to be aggressive and innovative in addressing the future of this asset.
To the extent that this will entail recapitalization of the Company, such recapitalization will be considered against an aggressive, innovative and bankable business case.
We are convinced that management and the board of BBI have sufficient skills and expertise to drive this company to profitability and to leapfrog our country in terms of broadband penetration and competitiveness.
We therefore require that thought and more effort be expended to respond to intensified competition in the market.
Having due regard to the country’s competition laws, we encourage BBI to collaborate with other state owned companies in areas of mutual benefit so that we can realise our objective of increased broadband penetration nationally.
We also invite private sector players to engage with BBI on their infrastructure needs and explore partnerships with BBI.
We are cognisant of the contents of the draft national broadband policy.
We support the broad thrust of the policy and are engaging with our counterparts at the Department of Communications on its specific impact on the sector and on BBI.
It is our belief that the role of state-owned ICT infrastructure companies should be clarified and their future contribution be clearly spelt out.
We are of the view that BBI’s statutory mandate, its experience as a common carrier and vast network renders it a key player in the anticipated National Broadband Network.
Since the advent of the Eletronic Communications Act, there has been a proliferation of the deployment of fibre optic cables for the provision of broadband.
Various state agencies and municipalities have rolled varying kilometers of fibre. We support the concept of linking our cities and ensuring that agencies utilize more broadband.
However, we believe that the new policy should streamline the roll out of broadband infrastructure by municipalities and state agencies.
There needs to be an efficient deployment of government’s resources. We must recall that Parliament through statute mandated BBI to carryout this function.
State agencies and municipalities are encouraged to engage BBI with respect to their needs.
It is part of BBI’s mandate to ensure that broadband is accessible even to people in rural and underserviced areas.
We believe that this can be achieved by BBI if it were to be the government’s broadband infrastructure provider of choice.
International best practice shows that BBI can leverage on government being an anchor tenant and extend its reach to under served areas.
In our engagement with the Department of Communication we shall raise our view that there should be an efficient deployment of state ICT infrastructure in all its tiers and that the government should be BBI’s anchor tenant. All of these matters are urgent and demands agility on the side of BBI management and the board.
In the year under review, BBI continued to experience strain. However, we have seen growth in non-current assets and the reduction in operating costs.
The deployment of R143 million worth of capital expenditure projects in the 2012/13 financial year, despite the limited resources at the company’s disposal is also encouraging.
A timely and appropriate addition of capital assets is critical in ensuring that Broadband Infraco is well placed to aggressively grow its market share. The Company’s continued investment in capital assets is a well considered direction to ensure that the growth and diversification of the revenue base is achieved.
We are pleased to announce that Broadband Infraco managed to receive an unqualified audit opinion for the 2nd consecutive year.
We are also encouraged by the improved internal controls. Not only is good corporate governance a legal requirement, but it is critical for the success of the business.
For the year under review, Broadband Infraco has been able to achieve 75% of its compacted targets.
The difficult economic conditions which we have highlighted; the sub-optimal network infrastructure; and the high infrastructure costs have resulted in a reversal of some of the operational gains achieved by Broadband Infraco in the 2011/12 year.
Despite the foregoing, the company has ensured operational improvements by exceeding Network service availability, recording 99.64% for the year measured against the availability target of 99.5%. This is due to the excellent Mean Time to Repair (MTTR) of 5.22 hours measured against a target of 8 hours. This shows that despite the challenges of aging network, the company continues to restore major faults on the network effectively and timeously.
Performance against transformational targets
In the budget vote earlier this year, we indicated that, we will pay more attention towards to transformation and industrialization. Broadband Infraco’s role in addressing spatial imbalances and leading infrastructure roll out in marginalised communities cannot be understated.
We note the achievement recorded by the Company in relation to 86% BBBEE spend surpassing the 60% target.
The company further rolled out 25 Universal Services Access PoPs (Points of Presence). We are also encouraged by the achievement of the gender split targets set
in the Company’s Employment Equity Report.
In a sector that is characterised by being disproportionately skewed in favour of males,
Broadband Infraco has a distinct role to play in training women in ICT and also in providing a platform for them to grow their ICT businesses through trade.
We remain convinced that Broadband Infraco has a major and strategic role to play in the economy.
We remain strongly supportive of the board and management. We shall also not relent
in our activist oversight role to ensure that the board and management keep to their commitments.