Losses at state-owned Broadband Infraco have widened substantially in the past year, with revenue collapsing by 40% on account of reduced business from the company’s largest customer, Neotel.
Higher staff costs and increased network maintenance costs have hit the bottom line in the year to March 2013, it said on Thursday.
Gross profit tumbled from R119m to R65m, while the loss for the year was R181m, substantially worse than a loss of R95m posted in 2012.
Revenue fell to R237,4m, down from R394m, on the back of shrinking business from Neotel.
The company presented its results to shareholders and the media at its Johannesburg office on Thursday, but was unable to supply a full copy of its annual results to journalists, claiming that the results had not yet been printed and that they had yet to be approved by parliament.
CEO Puleng Kwele said the company is “divesting from being linked up with Neotel to being fully independent” and that this has necessitated taking on new staff and projects.
It has also made it necessary to audit the company’s network to evaluate which portions were used exclusively by Neotel and which were used by both the telecommunications operator and Broadband Infraco.
Chief financial officer Ramasela Magoele said the move to separate the Neotel assets has had an “immediate impact” on its results, but argued that it has also “opened doors”.
“The architecture of the network was to enable Neotel, so by diversifying, we’re opening ourselves to more customers and can attract customers that used to use Neotel’s services by laying a small amount of fibre to their doors,” Magoele said.
The company generated positive cash flow of R10,2m and cost of sales decreased by 37% to R172,2m. It also increased its customer base of telecoms companies from seven to 11 over the past year.
Infraco said it had sold 70% of its capacity on the West African Cable System for the Square Kilometre Array project, the radio telescope to be built in the Northern Cape. It said this will generate funds of over R600m, half of which will be accounted for in this financial year. Kwele said this will bolster Infraco’s liquidity.
The company had R343m in cash at year-end and Kwele said it continues to “engage potential funders” for further money to support its capital expansion programme. She said Infraco needs a further R1,1bn if it is to address government’s goal of providing universal broadband access by 2020. — (c) 2013 NewsCentral Media