As the shareholder Minister for Broadband Infraco, I am pleased with the overall progress that the Company has made in the previous financial year. As a start-up Company, BBI is making steady progress with regard to financial performance and in strengthening its governance policies and practices, resulting in unqualified audit opinion for the year under review. Although this is an on-going process, I am confident that the Company has turned the corner from its past experience of poor governance that attracted negative attention.
Broadband Infraco has posted improved financial performance, with revenue of R393.6 million, up from R297.6 million in the previous year. The Company’s customer base has grown, from contracts with Neotel, Liquid Telecommunications and MTN in the previous year to now also include R100 Million worth on new short-term lease or Indefeasible Right of Use (IRU) contracts with SALT/KAT (via Neotel), Seacom, Vodacom, Internet Technologies (Namibia) and Business Connexion. Broadband Infraco recently entered into a new standard five-year customer relationship with Neotel, therefore ending the historic Right of Use (ROU) between the two entities.
In addition to the above, the company has for the first time generated positive cash from operations of R52 million, resulting in reduced losses compared to the year before. As Shareholders, we remain committed to supporting the Company in fulfilling its mandate of reducing broadband cost and penetration in the country as whole. We therefore will continue to support the company during its formative stage and in its work to roll out the necessary infrastructure to deliver on its mandate.
I am proud about the successful launch of the West African Cable System (WACS) in May 2012 by Broadband Infraco and its partners. With South Africa having won the right to host the major portion of the Square Kilometre Array (SKA), WACS will play a significant role in the provisioning of international bandwidth. To this end, I will continue to engage my colleagues in Government to ensure that this capacity supports project of national importance.
Having said the above, much remains to be done in ensuring long term sustainability of the Company as agreed in the Shareholder Compact. The Company has achieved and exceed most of the agreed key performance indicators in the financial year under review, and as Shareholders we challenge the Company to set higher goals for itself so as to support economic growth.
In view of the current economic situation, I am pleased that Infraco has observed the moratorium on increases in respect of remuneration of the executive committee. I have consistently conveyed my concerns that remuneration of state owned companies must reflect a balance between its commercial imperatives and public mandate.
It is critical for Boards to be restrained in their decisions regarding remuneration and incentives to executives. Incentives must reflect a transparent alignment to actual achievements against shareholder compact targets.
- I therefore congratulate the Board and Management for the commendable work done in steering the company in the short period since their appointment. Broadband Infraco’s contribution to the New Growth Path remains that of being a catalyst to economic growth and in supporting the developmental objectives of broadening access to ICT services and broadband particularly to underserved areas, particularly in the context most especially of the Presidential Infrastructure Coordinating Committee (PICC).
Going forward I have mandated the Board to pay special attention to the following;
- Firstly, increasing the focus on the development of leadership and management competencies for business strategic capabilities, and effective people management for optimum performance including development of new skills.
- Secondly, ensure that the Company continues to align its business plan with national objectives for broadband infrastructure
- Thirdly, pay particular attention to industry trends and developments such as the provision of backhaul for Digital Terrestrial Television (DTT); and the eminent Spectrum allocation for the provision of wireless broadband services; and
- Lastly, develop a detailed plan aimed at ensuring that Government is efficient and cost-effective in its broadband services and attracts other SOC, national and provincial government broadband traffic.
The attainment of universal access to reliable and cost effective broadband services by 2020 remains a key Government priority and Broadband Infraco will significantly play a critical role in this regard.
In conclusion, as Shareholders we remain committed to ensuring that the company succeeds and it’s able to discharge its mandate of reducing broadband cost and increasing broadband penetration in the country and the region.
I thank you
