South Africa: Sentech, Infraco merger not imminent

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Public enterprises minister Malusi Gigaba has again raised the possibility of a merger between state-owned enterprises Sentech and Broadband Infraco, but says nothing is imminent. “It would be the culmination of a process,” Gigaba says.

There has been talk for at least a year that the two companies could be merged. Sentech, in addition to providing broadcast signal distribution services, is keen to roll out a broadband network in rural areas; Infraco is keen to do the same, though providing more of the backhaul-type services that would support the wireless access network Sentech is proposing.

Gigaba says government has begun “emphasising cooperation” between the two companies and says a merger can’t be ruled out down the line.

“We have begun discussions at ministerial, director-general and board levels to try to find the synergies to improve cooperation between the two organisations through entering into a venture agreement,” he says. “At one stage or another, depending on the programme we establish and follow, we might arrive at a point where we say both organisations need to merge to form one organisation.”

Sentech reports to the department of communications, while Infraco is answerable to public enterprises, which could complicate attempts at cooperation. Gigaba explains the reason they report to different ministries is that they are “not the same types of organisations” because Sentech “gets its budget from government and Broadband Infraco raises its own resources to support its programmes”.

He adds that the presidential review committee is trying to resolve a number of issues related to state-owned enterprises, including reporting lines and the need for rationalisation. Gigaba hopes the committee will close “that lacuna” by rationalising reporting lines.