Cwele: SOE cost-cutting plan under way

Cape Town – The department of telecommunications and postal services has started to accelerate the rationalisation of state-owned entities (SOEs) to save money.

Minster Siyabonga Cwele on Tuesday said that the programme to rationalise SOEs was under way to limit the duplication of work among various entities.

Cwele's department looks over state-owned companies such as the South African Post Office (Sapo), connectivity firm Broadband Infraco and signal provider Sentech. 

“What was actually driving this [programme] is we were actually trying to avoid duplication where we invest in companies who do exactly the same thing as each other when we’ve got limited resources to sustain both,” Cwele told a media briefing following the department’s budget vote on Tuesday.

“The process as you know is being led by the deputy president and we are looking at all state-owned entities,” Cwele added.

The statement follows President Jacob Zuma’s State of the Nation speech in which he said that the government was intent on saving money and would investigate the rationalisation of SOEs.

“Those companies that are no longer relevant to our development agenda will be phased out,” Zuma said.


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Cwele said that the department would investigate private sector partnerships to drive government’s goal of universal broadband, estimated to cost about R60bn.

“That work has not been concluded yet; we are working very closely; we are meeting every two weeks under the guidance of the deputy president,” he said.

However, the minister quashed rumours of a possible sale of SOEs such as Broadband Infraco (BBI).

“There is no privatisation at this stage – it is more about strategic partnerships,” he said adding that the department would provide cabinet a progress report in July.

In 2015, BBI revealed to the portfolio committee that it required an urgent cash injection of R243m. It also wants a further R932m in funding until 2019 on top of R1.8bn that government had allocated to the entity.

Treasury has rejected appeals from Cwele’s department for additional BBI funding.

Cwele said that the department would investigate synergies between SOEs BBI and Sentech, as well as listed companies like Telkom in the roll-out of broadband.

“Sentech through its infrastructure - some of it is lying idle now because of the delay in DTT [digital terrestrial television]. It can be used for broadband connectivity and infrastructure.

“That’s the type of partnership and rationalisation we are talking about,” Cwele added.

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