Transcript The Purpose of Broadband Infraco

Presentation to Parliamentary Portfolio
Committee on Telecommunications &
Postal Services
14 November 2014
The Purpose of Broadband Infraco
NDP
DTPS Vision
2020
SA Connect
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.
100% of South Africans will have access to broadband services at 2.5% less of the populations
average monthly income
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 Readiness
Digital Development
Digital Future
Digital Opportunity
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
Broadband roll out is aligned to
national government
programmes.
Aggregation of public
sector demand (SITA
10 year contract
• Enterprise development and
localisation
Long term collaboration
of existing infrastructure
providers:
Eskom
Transnet Freight and Rail
PRASA
Provincial government
WACS – consortium
DFA
Skills and institutional capability
Internship Programme (10
interns)
Broadband Infraco Staff: Average
age of 34 years
Slide 2
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
ICT Policy Review Committee
 2012  requested
membership to PRC while
under DPE
 November 2014 
requested membership to
PRC
 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
USAASA
 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
Slide 3
Broadband Infraco Implementation as at 2012
Shareholder Capitalisation
WACS
R440 534 000
SELF BUILD
ESKOM (assets)
R779 011 000
12 681km of fibre
144 PoP
Resultant Network
R1, 8 billion
R377 300 000
TRANSNET
(assets)
OFFICE & COMPUTER EQUIPMENT
R34 163 000
R13 955 000
WACS CONNECTIVITY
SADC CONNECTIVITY
EXPANDING ACCESS
ENABLING GOVERNMENT
• Broadband Infraco is a
significant investor in the
5.1Tbits/s West Africa Cable
System (WACS) Project.
• Swaziland: Created new
route that goes through
Pietretief then Mahamba
• 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
• Connected Government
through SITA.
• 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.
• Namibia: Created new route
Aries, Schuibsdrift then
Onseepkans
• Mozambique: Kamedien to
Komatipoort on the TFR fibre
• Zimbabwe: Soekmekaar to
Beitbridge
• This was to have the
South Ring between
Gauteng, Kwa-Zulu Natal
Western Cape.
• Testing Equipment
• Monitoring system
• Transmission equipment
Slide 4
Consolidated Customers, Revenues & Cost of Sales
Customers, Revenue and Cost of Sales
What does each axis represent?
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.
Slide 5
Delivery of Mandate and outcomes
Delivery of
Mandate
As at 31 March 2012
As at 31 March 2013
As at 31 March 2014 Year to Date
Kms of Fibre
12681km
12793km (112km added)
13 000 KM Geographic Coverage
Access Points
144
152
162 PoPs
SADC
Connectivity
4 PoPs
5 PoPs (Beitbridge PoP added)
Connected all SADC neighbouring
countries (Ramatlabama
connected)
International
Access
Only SADC
WACS connected national terrestrial
network
Business
Operations
None
Insourcing completed, OSS/ BSS
designed.
Security around
54 Mesh
None
One (1) site secured (Athene site).
IP Update to date
IP/MPLS on Golden
Triangle
No expansion - currently using Ethernet
over SDH as workaround.
Implemented Phase 1 of the ERP
system. User requirements
specifications for Phase 2 in
progress
Thirteen (13) sites planned for this
next financial year.
Expansion to 3 priority provinces
planned for this year (Limpopo,
Mpumalanga and Eastern Cape)
Slide 6
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
Northern Ring Upgrade
Limpopo
Mpumalanga
Capacity increased for 160 Gbps ->
480Gbps
MTS upgrade
Eastern Cape, KZN, Gauteng & Western
Cape, Northern Cape
From 40 Gigs to between 80 Gig –
120 Gig
SADC
All 6 neighbouring countries
Capacity
155 Mbps – 40 Gigs
• Renewed 40% of obsolete transmission equipment
Slide 7
Transformation and Enterprise Development
Young women in
ICT/Engineering
Enterprise & Supplier Development
 Broadband Infraco runs a graduate
internship programme that targets
the development of scares Network
Engineering
skill-pool
in
2010, with three successful follow Of these, 6 interns have been
absorbed
into
permanent
employment.
 There are currently 10 interns
recruited in 2013, to complete the
R1.2 mil YTD
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.
Date of
up groups to date.
R11.4 mil YTD
Indirect jobs
Africa to meet current and future
 The first intake was in January
Spend on BYO
2014
South
industry needs.
Spend on BWO
06th Jun 2013
13 Jun 2013
27th Sep 2013
Indaba Hotel
Nafcoc offices,
Polokwane Royal
KZN
Hotel
roadshow
Venue of
Roadshow
No. of delegates
153
47
111
+ 400
13
15
who attended
No. of women
registered
programme in December 2014.
Slide 8
Shareholder Compact 2014/15
Strategic Objective
Ensure Business Sustainability
& Network Saleability
KPI
Target
Network performance rebates paid as percentage of
gross revenue
≤3%
Cash at the end of the year
≥R100 mil
Measure EBIDTA based on budget
≥(116.6) mil
(60%)
Company Sustainability
Overall increase in capacity sold at STM-1
10% increase
equivalent in the Golden Triangle, Northern Ring
(113 STM-1)
and other routes
Extend the network and enable the connection of
75 services by 1 Jan 2015
the 2nd anchor customer (Cell C
Network Improvement
(20%)
Establish new open access PoPs
Establish
premises
a
laboratory
at
Broadband
5 PoPs by 31 December 2014
Mandate Delivery
Infraco Fully functional Lab by 31 March
2015
Training spend as percentage of payroll
3
Increase in number of engineers in training per
10
annum
Increase in number of direct jobs created
baseline+2% (3 employees)
Economic Transformation
(20%)
Increase in number of indirect jobs created
10
Allocation of BBBEE budget discretionary spend
70%
Percentage increase on black owned entities spend
40% spend of BBBEE
Percentage spend of Youth Owned entities
10% spend of 40% spend on BOE
Percentage spend of Women Owned entities
10% spend of 40% spend on BOE
Socio-economic transformation
Amount spend on People with disabilities owned
300000
entities
CSI projects completed
Interactive whiteboards and internet
facilities and Maths equipment
Slide 9
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
-
Eastern Cape
64.68 KM
-
Eastern Cape
87 KM
1
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
Challenges and Mitigation
Challenges
 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
Mitigations
 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
Slide 11
Thank You
Slide 12