Broadband Infraco needs a Treasury guarantee to go forward
CAPE TOWN — State-owned IT infrastructure company Broadband Infraco cannot be certified as a going concern by its auditors without receiving a state guarantee, MPs were told yesterday.
The company’s applications to the Treasury for funding and guarantees have been rejected for a number of years, but a Treasury committee is now considering a request for a R243m going concern guarantee. This is according to a director in the Treasury’s asset and liability division with responsibility for state-owned enterprises, Othelia Groenewald, speaking in a briefing to Parliament’s telecommunications and postal services portfolio committee.
Without such a guarantee, Broadband Infraco will receive an adverse opinion from its auditors and will then have to go into business rescue.
South African Airways was in a similar situation earlier this year and had to be rescued by a further state guarantee.
Broadband Infraco would use the guarantee to raise funds for the company, which expects to run out of cash by the end of December.
Ms Groenewald said the Treasury had also received a request for R932m in funding for the 2017-18 and 2018-19 financial years to allow the company to continue operating pending the finalisation of the government’s plan to rationalise its assets in the postal and telecommunications sector to achieve efficiencies.
The time frame for the rationalisation is about three years. Telkom has been identified by the government as the lead agency for the roll-out of broadband infrastructure.
Department of Telecommunications and Postal Services directorgeneral Joe Mjwara strongly rejected a suggestion that the government planned to sell Broadband Infraco, saying this was not under consideration.
Ms Groenewald said the Trea- sury, had on numerous occasions, advised Broadband Infraco that it should reduce its capital expenditure, but it had proceeded to enter into contracts even though it did not have the necessary upfront capital outlay. However, company chairman Mandla Ngcobo denied having been told this and said with the necessary funding Broadband Infraco would become profitable.