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Presentation to Parliamentary Portfolio Committee on Telecommunications & Postal Services

Presentation to Parliamentary Portfolio Committee on Telecommunications & Postal Services 14 November 2014. The Purpose of Broadband Infraco. NDP.

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Presentation to Parliamentary Portfolio Committee on Telecommunications & Postal Services

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  1. Presentation to Parliamentary Portfolio Committee on Telecommunications & Postal Services 14 November 2014

  2. The Purpose of Broadband Infraco NDP Broadband Infraco’s purpose is in line with the NDP of establishing national, regional and municipal fibre-optic network to provide the backbone for broadband access. Broadband Infraco operates on the premise that national backhaul, provincial backhaul and districts backhaul require state intervention, thus allowing private investment to lead the way in the access market. DTPS Vision 2020 100% of South Africans will have access to broadband services at 2.5% less of the populations average monthly income SA Connect Broadband Infraco’s roll-out of long distance backhaul fibre to underserviced areas will enable provincial governments to leverage such broadband infrastructure and services for economic growth, job creation initiatives and poverty reduction efforts. Digital Future Digital Opportunity Digital Readiness Digital Development • BBI boast an open access network and supports public and private investments in the telecommunications sector. • Delivery of 28 PoP to underserviced areas. • Broadband Impact Economic Metrics: • For every 1% increase in broadband penetration GDP increases by R4.83bn • For every R1 spent on broadband society benefits R2.53 Skills and institutional capability Internship Programme (10 interns) Broadband Infraco Staff: Average age of 34 years Long term collaboration of existing infrastructure providers: Eskom Transnet Freight and Rail PRASA Provincial governmentWACS – consortiumDFA • Broadband roll out is aligned to national government programmes. • Aggregation of public sector demand (SITA 10 year contract • Enterprise development and localisation Slide 2

  3. Broadband policies and regulations Broadband Infraco Act • 2010  issued with ECNS licence • 2014  applied for ECS licence • Explore partnership with other SOC’s within DTPS • The ECA Amendment Act, limits the operational scope of Class ECS licences to district municipalities only and given Broadband Infraco’s national operations, the Class ECS licence is not a viable option ICT Policy Review Committee USAASA • 2012  requested membership to PRC while under DPE • November 2014  requested membership to PRC • USAASA has finalised its National Strategy and the Funding Manual • Broadband Infraco supported the USAASA MTEF application ICT Policy Review Panel Infrastructure & Services Sub-Committee • Broadband Infraco is actively participating in the Infrastructure and Services Committee of the Panel

  4. Broadband Infraco Implementation as at 2012 12 681km of fibre 144 PoP Resultant Network R1, 8 billion Shareholder Capitalisation R34 163 000 TRANSNET (assets) R377 300 000 WACS ESKOM (assets) R440 534 000 SELF BUILD OFFICE & COMPUTER EQUIPMENT R779 011 000 R13 955 000 WACS CONNECTIVITY SADC CONNECTIVITY EXPANDING ACCESS ENABLING GOVERNMENT • Duff to Stanger to Zinkwazi then Athene • North Station to Durban : creation of parallel link • Oribi, Eros & Kokstad • Increase capacity on the Golden triangle i.e. 38 PoP and Fibre deployment • Internet Protocol: Scalable network: • Ermelo to Geluksplaas then Witbank • Provisioning services to Secunda • Welkom • Bethlehem to Sorate • Megawatt to Bloemfontein deployment of fibre • Uniondale , Louterwater then Melkhout • Grahamstown alternative route connecting Rhodes university • NSN, Belabela, to Modimolle, then Polokwane • Broadband Infraco is a significant investor in the 5.1Tbits/s West Africa Cable System (WACS) Project. • The cable connects South Africa (SA) to the United Kingdom (UK), with landing stations in Portugal and along the west coast of Africa. • Lower cost, sustainable and efficient international bandwidth; • Positions SA for future economic growth as it connect SA to key global knowledge economies of the world. • Swaziland: Created new route that goes through Pietretief then Mahamba • Namibia: Created new route Aries, Schuibsdrift then Onseepkans • Mozambique: Kamedien to Komatipoort on the TFR fibre • Zimbabwe: Soekmekaar to Beitbridge • Connected Government through SITA. • This was to have the South Ring between Gauteng, Kwa-Zulu Natal Western Cape. • Testing Equipment • Monitoring system • Transmission equipment Slide 4

  5. Consolidated Customers, Revenues & Cost of Sales What does each axis represent? Customers, Revenue and Cost of Sales Customers A significant growth of our customers from 1 to 14, including signing SITA as an anchor client Revenue Decline in 2013 due to the end of Rights of Use (ROU) with Neotel. More customers acquired and a positive trend is expected. Cost of Sales Efficient management of Cost of Sales.

  6. Delivery of Mandate and outcomes

  7. Broadband Infraco alignment to Broadband Policy Targets Broadband Policy Target • Broadband access in Mbps User Experience • 50% at 5 Mbps 2016 • 8 895 kms of fibre • 158 PoPs nationally • R50 billion What has Broadband Infraco done Initiatives Areas Outcome Limpopo Mpumalanga Northern Ring Upgrade Capacity increased for 160 Gbps -> 480Gbps Eastern Cape, KZN, Gauteng & Western Cape, Northern Cape MTS upgrade From 40 Gigs to between 80 Gig – 120 Gig All 6 neighbouring countries SADC Capacity 155 Mbps – 40 Gigs • Renewed 40% of obsolete transmission equipment Slide 7

  8. Transformation and Enterprise Development Enterprise & Supplier Development Young women in ICT/Engineering • Broadband Infraco runs a graduate internship programme that targets the development of scares Network Engineering skill-pool in South Africa to meet current and future industry needs. • The first intake was in January 2010, with three successful follow-up groups to date. • Of these, 6 interns have been absorbed into permanent employment. • There are currently 10 interns recruited in 2013, to complete the programme in December 2014. 2014 Spend on BWO R11.4 mil YTD Spend on BYO R1.2 milYTD Indirect jobs created 7 YTD Basadi in Telecoms The program aims at transforming the Telecommunication Sector through the empowerment of Black Women, Youth and Small Medium and Micro Enterprises (SMME) Nationally.

  9. Shareholder Compact 2014/15

  10. Significant projects: SITA and Cell C • Both projects: • Expand the network and enable access • Enable independence from Neotel • Provide coverage in all 9 provinces • 3rd Party metro networks are being utilised to avoid duplications SITA Cell-C • The State Information Technology Agency (SITA) has appointed Broadband Infraco to provision and manage 54 SITA Next Generation Network (NGN) 1GE services for a period of 10 years, commencing on the 1st of August 2014. • Cell C appointed Broadband Infraco to provision 125 Broadband services for 5 years effective 1 June 2014. • Broadband Infraco has to extend its existing network via fibres to Cell C and terminate it directly at the Cell C premises. Province Fibre (KM) PoP Province Fibre (KM) PoP - - Northern Cape 9.08 KM Northern Cape 1.5 KM Western Cape 23.84 KM 1 Western Cape 190 KM - - 1 Eastern Cape 64.68 KM Eastern Cape 87 KM Free State 9.69 KM 1 Free State 43 KM - - - North West 14.47 KM North West 100 KM - - KZN 32.9 KM KZN 114 KM Gauteng 73.7 KM - Gauteng 174 KM 1 Limpopo 13.09 KM - Limpopo 6 KM - Mpumalanga 10.55 KM - Mpumalanga 65 KM - Slide 10

  11. Challenges and Mitigation Mitigations Challenges • Ongoing Engagement with the Department on funding support • Reprioritization of Capital Projects to manage cash flow: Capex revised from R529 to R386 million • Submitted R170 mil short term government guarantee application to Executive Authority • A memorandum of Investment submitted to the DBSA. This is meant to solicit a funding structure for commercially viable projects. • Broadband Infraco intends to apply for a subsidy in terms of section 88(1)(b) of the ECA Amendment Act of 2014 • Develop a compelling employee value proposition • Develop a commercial model for engaging the non ICT SOC’s • Propose a framework for engaging Provincial and local government efforts • Securing funding • Autonomy of the network • Attracting critical and core skills • Role of Non ICT SOCs with ICT assets • Coordination of provincial, district, metro and municipality broadband roll out

  12. Thank You

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