Vodacom eyes buying unprofitable govt internet firm

Johannesburg - Vodacom is considering a bid for unprofitable state-owned internet company Broadband Infraco, as the country works toward the privatisation of some government assets.

The acquisition could help Johannesburg-based Vodacom make up for an abandoned R7bn proposal to buy internet provider Neotel last month, Chief Executive Officer Shameel Joosub said in e-mailed comments on Monday. Broadband Infraco’s assets were valued at R2.1bn as of end March 2014, according to its latest audited financial report.

“When our proposed acquisition of Neotel lapsed earlier this year, we said that our ambition to increase the rollout of fibre-based broadband services to customers remains,” Joosub said.

“Acquiring an asset like Broadband Infraco would help achieve this and would be supportive of the government’s” ambition to increase broadband access, he said.

The potential sale of Broadband Infraco would follow a report commissioned by President Jacob Zuma that showed South Africa should consider selling stakes in state-owned companies to private entities to improve their finances and tackle operational failures.

The government is considering merging two state-owned airlines and selling off a stake in the enlarged carrier to private investors, Finance Minister Pravin Gordhan said in his budget speech in February. Vodacom shares rose 0.8% to R166.97 as of 12:08 p.m. in Johannesburg, increasing the 2016 gain to 9.6%. That values the company at R248bn.

Vodacom, 65% owned by Newbury, England-based Vodafone, scrapped the purchase of Neotel from Tata Communications of India after almost two years of regulatory battles and legal opposition from its competitors.

The company pursued Neotel to increase its spectrum and fibre network for broadband provision to consumers and businesses.

Neotel uses Broadband Infraco’s network, which includes more than 147 000 kilometers in fixed-line infrastructure, to deliver some of its services.

Treasury spokeswoman Phumza Macanda didn’t immediately respond to an e-mail and phone call seeking comment.