State broadband merger limps into a second decade

The merger between state-owned signal distributor Sentech and Broadband Infraco (BBI) – the ailing fibre wholesaler meant to serve as South Africa’s “carrier of carriers” – has been pushed out to the 2028/2029 financial year, more than a decade after the idea was first put forward.

The updated plan, to create a state-owned digital infrastructure company, is set out in the department of communications & digital technologies’ annual performance plan (APP) for 2026/2027, which was tabled in parliament on 31 March.

“The development and progression of the road map for rationalising BBI and Sentech contribute to improved efficiency and sustainability of ICT infrastructure entities. In 2026/2027, the focus is on advancing the road map towards implementation, ensuring that duplication of resources is reduced, operational efficiencies are improved and infrastructure delivery is optimised,” the document said.

Broadband Infraco, which operates a national fibre network, is a state-owned company founded in 2007 to provide cheaper long-distance bandwidth to underserviced areas and to break Telkom’s backbone monopoly. It was the brainchild of former public enterprises minister Alec Erwin, who had grown frustrated with the slow pace of liberalisation in the sector being led by his cabinet colleague at the time, the late communications minister Ivy Matsepe-Casaburri.

Nearly two decades on, the verdict on Broadband Infraco’s track record is grim:

• Consecutive annual losses since 2019;
• Technical insolvency confirmed in due diligence for the long-promised Sentech merger;
• Five consecutive years in which the auditor-general has been unable to complete a full audit;
• An unpublished 2024/2025 annual report; and
• The loss of its two biggest public sector contracts, with the State IT Agency and Eskom.

In February, BBI CEO Gift Zowa told parliament that “it’s actually a miracle that BBI has survived for so long without a cash injection from national treasury”.

The planned merger with Sentech, to form the State Digital Infrastructure Company (SDIC), was approved by cabinet in December 2017 and has gone nowhere since. Once framed as urgent in order to eliminate duplication and create a state-owned digital infrastructure powerhouse, the merger has devolved into an endless series of preliminary reports, road maps and “strategic options”.

Keeps slipping

According to the communications department’s annual performance plan, the current plan is to finalise yet another preliminary report in 2026/2027, followed by a finalised road map in 2027/2028, with implementation only beginning in 2028/2029. That represents at least the third iteration of timelines since the plan was first approved.

Stella Ndabeni-Abrahams publicly announced the merger on 19 December 2019 when she was still communications minister, saying the two companies should be combined to avoid duplication in state-led infrastructure development. By December 2022, then-minister Khumbudzo Ntshavheni was telling parliament the merger had reached “an advanced stage”, with the new company due to be established by April 2023.

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Tellingly, the performance plan shows that the 2025/2026 estimated performance for this indicator was a “road map document on the options to rationalise BBI and Sentech finalised”. A year later, the department is starting again with a preliminary report.

While not as dysfunctional as BBI, Sentech is not without its own challenges. The signal distribution company has struggled to find relevance in an era of streaming and direct-to-home satellite services, with its terrestrial broadcasting infrastructure becoming increasingly obsolete.

Sentech has been embroiled in a long-running signal fee dispute with the SABC over what the latter has described as monopoly pricing. The SABC owes Sentech more than R1-billion for signal distribution services. Communications minister Solly Malatsi initiated a mediation process in October 2024; a mediator has since been appointed but no settlement has yet been announced.

The BBI-Sentech saga bears uncomfortable similarities to the situation at Sita. According to the auditor-general’s 2024/2025 consolidated general report, Sita has operated without a permanent CIO for more than three years, has had no permanent board and no permanent MD, and ran a 54% executive vacancy rate during the audit period. Like the BBI-Sentech merger, Sita’s restructuring has been promised for years without meaningful progress.

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The communications department has set itself an ambitious legislative and governance agenda for the 2026/2027 financial year, including the progression of the national AI policy in cabinet (now withdrawn after it was found to contain AI-hallucinated citation errors), the finalisation of electronic communications amendment legislation and the development of the road map to rationalise BBI and Sentech.  – © 2026 NewsCentral Media