State-owned broadband company records large losses and fails to publish its annual report
March 3rd 2026
Broadband Infraco has reported consecutive annual losses since 2019 and has failed to publish its annual report for the 2024/25 financial year.
Since 1 April 2020, Broadband Infraco has reported a combined loss of R546 million, as well as mounting irregular, fruitless, and wasteful expenditure.
Its last annual report for the financial year ended 31 March 2024 showed that the failing state-owned enterprise had become technically insolvent, with net equity of -R23.3 million.
This is despite revenue increasing by over 15% from R471 million to R545 million, and cash and cash equivalents increasing by 125% from R221 million to R496 million.
At Broadband Infraco’s annual general meeting at the end of February 2025, CEO Gift Zowa assured the company was on track to become a “more commercially sustainable entity”.
However, since then, it has failed to release its annual financial statement. The Auditor General has also been unable to complete an audit of any of the company’s financial statements in the past five years.
Broadband Infraco was founded in 2007 to take custodianship of the long-distance national fibre infrastructure originally built by Eskom Enterprises and Transnet.
Although it has a profit mandate as a Schedule 2 company under the Public Finance Management Act, it has a history of making substantial losses and struggles to fulfil its mandate.
Since 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.
It was awarded an Individual Electronic Communications Network Services Licence in 2009, which permits it to operate physical telecommunications infrastructure and sell wholesale services.
This allowed Infraco to sell high-capacity long-distance transmission services to other licensed fixed and mobile network operators and Internet service providers.
The company reports to the Department of Communications and Digital Technologies (DCDT) and the Industrial Development Corporation in their capacity as its shareholders.
Based on information from its latest financial report and corporate profile, the company’s fibre-optic network comprises nearly 15,000km of fibre and 156 points of presence.
Dire financial situation
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 state signal distributor Sentech would buy Broadband Infraco to establish the combined entity. However, the acquisition faced headwinds when Infraco’s solvency and liquidity were tested.
The due diligence on Infraco found it technically insolvent and that its liquidity ratio was below 1. Therefore, Infraco’s assets are insufficient to cover its long-term liabilities, and it cannot settle its short-term debts.
Sentech warned that pursuing the acquisition would likely result in severe financial strain on both entities and said it could lead to operational inefficiencies and jeopardise service delivery.
It also cautioned 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 resulted from consistent mismanagement at Broadband Infraco, which has failed to turn a profit since 2019.
In response to recent Parliamentary questions, communications minister Solly Malatsi said that the DCDT holds formal quarterly performance and financial review meetings with Broadband Infraco’s management.
These are supplemented by monthly financial monitoring of liquidity, going-concern indicators, and progress against the Auditor-General’s audit action plan.
Specific commitments, such as loss reduction, network stabilisation, and increased utilisation of infrastructure for SA Connect, are tracked, with written feedback and directives issued where performance is off-track.
SA Connect is a government programme to provide affordable, high-speed, and reliable broadband Internet to all citizens, specifically targeting government facilities and rural and underserved areas.
“Broadband Infraco has been formally directed to prioritise stringent cost-containment, debt management, and cash-flow improvement measures within its turnaround strategy,” Malatsi said.
Additionally, both Broadband Infraco and Sentech are still to be “rationalised”, with the merger of the two entities intended to reduce costs as additional funding is not available.
“Steps will be taken in the first quarter of 2026 to appoint a transaction adviser for this purpose,” Malatsi said.
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