There is mounting concern in the telecommunications industry that the government is planning to award a R750m broadband project to Telkom to connect 5 000 government facilities in rural areas without first going out on a competitive tender.

In an interview on Friday, Vodacom CEO Shameel Joosub said it would not be in the government’s best interest to award a contract without going through a competitive process. Joosub said it might be the case that Telkom would win a transparent and open tender, but simply awarding the contract without soliciting other bids would not ensure that taxpayers’ money was spent most effectively and efficiently.

“We [Vodacom] have built a lot of capability over the years,” Joosub said. “The likes of Internet Solutions and MTN have also built up a lot of capability and have strong, formidable offerings in this space. Give the business to the best provider.”

Cell C chief legal officer Graham Mackinnon said the government “must follow a proper process with regard to appointing a lead agency in the roll-out of broadband infrastructure to underserviced areas”. Mackinnon said Cell C was “concerned” about the reliance on a single entity to roll out infrastructure. This was “unsustainable ” and a consortium of public and private organisations would be better placed to implement the roll-out, he added.

Some industry players are even warning privately that awarding the contract to Telkom without a competitive tender process could be unconstitutional and amount to little more than a sweetheart deal. The government holds a direct 39,8% stake in the telecoms operator — with that figure rising to 51,8% if the Public Investment Corp’s stake is included.

Earlier this month, Bloomberg reported that Telkom was close to sealing a deal with the government, saying it had already “carried out site inspections and studied how to implement the plan in eight districts”.

In his state of the nation address last week, President Jacob Zuma said the government would “fast-track the implementation of the first phase of broadband roll-out to connect more than 5 000 government facilities in eight district municipalities over a three-year period”. He did not name a service provider.

But in his state of the nation speech a year ago, Zuma said the government had decided to “designate Telkom as the lead agency” to build telecoms infrastructure in eight underserviced municipalities — presumably the same ones mentioned in this year’s speech.

But the government said this week it had not yet selected the lead agency for the project, despite indications that Telkom was on track to win the first phase of it.

Telkom spokeswoman Jacqui O’Sullivan declined to comment, referring questions to the department of telecommunications & postal services as it was the department, not Telkom, that was leading the project.

Siya Qoza, spokesman for the minister, Siyabonga Cwele, said the “lead agent in the roll-out of broadband through the government policy known as South Africa Connect has not been appointed yet”.

“The department is following due process to facilitate the roll-out of broadband for phase 1, which is aimed at linking government facilities in eight rural districts to fast, secure and reliable Internet,” Qoza said.

“The announcement of the service provider will only be done once the department has finalised the process and the subsequent conclusion of any of the necessary agreements.”

However, industry players said finance minister Pravin Gordhan could make further announcements in his budget speech on Wednesday.