Parliament questions the State Digital Infrastructure Company

The Portfolio Committee on Communications and Digital Technologies has raised concerns about the proposed State Digital Infrastructure Company (SDIC), following a presentation by the Department of Communications and Digital Technologies (DCDT). This planned state-owned digital infrastructure entity, which will be formed through a merger between signal provider Sentech and Broadband Infraco (BBI) backhaul connectivity, aims to address market failures in broadband access by focusing on rural and underdeveloped areas.

The SDIC is designed as a large-scale digital infrastructure provider, which will advance the goal of providing universal access to affordable broadband and broadcasting services across South Africa.

It will integrate both Sentech’s wireless broadband network and BBI’s fiber infrastructure, creating a national network that can serve government schools, healthcare facilities and rural government locations.

To ensure a seamless rollout, the SDIC will hold both Electronic Communications Services (ECS) and Electronic Communications Network Services (ECNS) licenses, allowing it to lease managed infrastructure for the public sector’s connectivity needs.

This will be overseen by a Joint Oversight Committee (JOC), consisting of senior representatives from both entities, including their CEOs, CFOs and officers of the DCDT.

The JOC is responsible for guiding the operational and strategic decisions that will shape the establishment of the SDIC – and also manages the Technical Committee, which will provide ongoing specialist support throughout the project lifecycle.

Concerns about consolidation

The SDIC is expected to consolidate the state’s digital infrastructure, enabling efficient use of resources and a unified state-run network.

This would make the SDIC a common carrier, providing high-speed and last-mile connectivity to previously underserved communities and government facilities.

According to the DCDT presentation, this would also reduce connectivity costs through economies of scale Finally achieve the open access policy that Ramaphosa’s government has promised to encourage infrastructure sharing between the public and private sectors.

However, Portfolio Committee members remain cautious about the financial and operational viability of the SDIC.

State infrastructure

The committee wants more clarity on the inclusion of other state infrastructure – such as networks owned by Eskom, Transnet, Sanral and Prasa – within the SDIC.

Without these resources, the committee fears a piecemeal approach that could limit the SDIC’s effectiveness in reducing connectivity costs for impoverished areas.

There are also concerns about financial stability at Broadband Infraco as the liquidity and solvency issues could weaken the sustainability of the new entity without additional funding beyond what was allocated under the SA Connect fiber expansion programme.

Icasa investigation delays

Commission chairman Khusela Sangoni Diko also urged Icasa to expedite a market study on the current ICT landscape.

The study would provide a clear answer if a state-owned digital infrastructure company remains necessary given the changes in the market since the introduction of the original rationalization policy.

“Let there be a process that provides a better insight into the market structure on the supply side to determine to what extent the government still needs to intervene,” Diko said.

The Portfolio Committee’s recommendations signal a call for the DCDT to explore a broader range of options and ensure that the establishment of the SDIC is both fiscally responsible and strategically aligned with South Africa’s connectivity objectives.