The state-owned telecoms company that lost R459 million and is technically insolvent

Broadband Infraco has lost R459 million in its past four financial years, and its financial statements for the most recent period have not been publicly released. 

The Auditor General has also not been able to complete an audit of any of its financial statements in the past five years. 

However, at the company’s annual general meeting at the end of February, CEO Gift Zowa said the company is on track to becoming a “more commercially sustainable entity”.

Broadband Infraco has a profit mandate as a schedule two company under the Public Finance Management Act. 

However, it has a history of recording financial losses and its struggles to fulfil its broadband access mandate are also documented.

Broadband Infraco is a licenced state-owned company in the telecommunications sector that provides long-distance national and international connectivity to private-sector partners. 

It focuses on providing connectivity to previously underserved areas by expanding the affordability of communication services. 

First founded in 2007, Broadband Infraco has grown its network to cover all nine provinces in South Africa and extends to the borders of the country’s neighbours. 

In 2009, it was awarded an individual electronic communications network services licence, which allowed it to sell high-capacity long-distance transmission services to licensed fixed and mobile network operators and internet service providers.

The company reports its activities and performance to the Department of Communications and Digital Technologies and the Industrial Development Corporation in their capacity as its shareholders.

According to its corporate profile, the company’s fibre optic network currently comprises 15,000 km of fibre and 156 points of presence. 

Despite this rapid buildout, it is estimated that around 80% of homes in South Africa remain unserved by reliable broadband internet. Only 10% of the population has access to internet connectivity through fibre or fixed-wireless. 

To resolve this issue, the government launched the ambitious SA Connect project to bridge the country’s connectivity divide. 

SA Connect is a combined effort between Broadband Infraco and the State Information Technology Agency, launched in 2013. 

Intended to ensure universal access to broadband services for all South Africans, the project would first connect government facilities, and phase two would provide Internet on an ongoing basis to unserved households. 

Through Phase 2 of the SA Connect programme, an additional 1180 kilometres of terrestrial fibre is planned to be deployed to enable coverage of about 5.5 million households.

However, this rollout has been limited by Broadband Infraco’s financial troubles, with it not having the balance sheet to develop the necessary infrastructure itself. 

Financial troubles

The severity of Broadband Infraco’s financial troubles became clear when the government tabled plans to create a State Digital Infrastructure Company (SDIC) in 2021. 

It was decided that Sentech would buy Broadband Infraco to create this company. However, this acquisition faced major challenges when the fibre company’s solvency and liquidity were tested. 

Sentech’s due diligence on Infraco found that pursuing the acquisition would likely result in severe financial strain on both entities. This could potentially lead to operational inefficiencies and jeopardise service delivery. 

The Department of Communications and Digital Technologies told Parliament in November 2024 that Infraco was technically insolvent as of the first quarter of the current financial year. Its liquidity ratio was less than 1.

In other words, its assets are insufficient to cover its long-term liabilities, and Broadband Infraco cannot settle its short-term liabilities.

It also warned that Broadband Infraco doesn’t have the capital to realise the growth plans necessary to generate positive cash flows from operations in the near future.

This dire financial situation was the result of consistent mismanagement at Broadband Infraco, with the company failing to produce a profit since 2019. 

In its most recent publicly available annual report, Broadband Infraco said it is struggling to provide connectivity to customers due to vandalism of its infrastructure. 

It also said that regular load-shedding isolates some of its Points of Presence sites across the country, limiting service to clients. 

At the company’s annual general meeting in February 2025, CEO Gift Zowa said the company is working to become financially sustainable. 

To achieve a better financial standing, BBI aims to diversify products and commercialise project opportunities.

“With the demand for high-speed internet rising, our role in delivering affordable, high-quality connectivity is more critical than ever,” Zowa said.

Zowa said the company’s key projects are the Broadband Access Fund and SA Connect Phase 2. 

Broadband Infraco’s Strategy 2040 is predicated on it being financially stable, with it focusing on managing its debt, diversifying its revenue, and prioritising investment. 

In the immediate future, the company said it will focus on improving its cash flow and aims to meet its long-term debt obligations. 

This will prove challenging, as the company has accumulated losses of R459 million in the past four financial years.

The graphs below show just how dire the company’s financial situation is.