A merger of troubled state-owned telecommunications infrastructure company Broadband Infraco and Telkom, in which government holds a 39,8% direct stake, looks increasingly certain, a report published on Monday said.

Business Day said Infraco has indicated in its latest annual report, tabled in parliament, that it “supports” a plan by government to merge it with Telkom. The report, for the 2015 financial year, was published six months late because of concerns over its going-concern status, the company said.

It has also reportedly said that it should receive assistance from the state as soon as possible to prevent “further erosion of its value”. Business Day said it is seeking a government guarantee of R246m to “mitigate the going concern risk” of the company.

Infraco lost R245m in the 2015 financial year, compared to a loss of R144m previously. Revenue was just R366, up from R302m.

In February, telecommunications & postal services minister Siyabonga Cwele said that the two companies were in talks about how they could co-operate on infrastructure projects.

The rationalisation process was “urgent” for Infraco, Cwele was reported to have said at the time.

Broadband Infraco, which was the brainchild of former public enterprises minister Alec Erwin, has struggled for years to turn a profit.

The company was established to create a national telecoms backbone to compete with Telkom, which had a monopoly at the time.