REPUBLIC OF SOUTH AFRICA

BROADBAND INFRACO BILL

(As introduced in the National Assembly (proposed section 75); Bill published in

Government Gazette No. 29879 of 11 May 2007)

(The English text is the offıcial text of the Bill)

(MINISTER FOR PUBLIC ENTERPRISES)

[B 26—2007] ISBN 978-1-920240-23-3

No. of copies printed .................................... 1 800

GENERAL EXPLANATORY NOTE:

Words underlined with a solid line indicate insertions in

existing enactments.

BILL

To provide for the transfer of shares, loan accounts, liabilities and guarantees in

Broadband Infraco (Proprietary) Limited from Eskom Holdings Limited to the

State; ~~to provide~~ that as from the transfer date~~for the licensing of~~ ~~Broadband Infraco (Proprietary~~[c1] ) ()

~~Limited~~ be regarded as having been granted an individual electronic communications

network services licence; to provide for the expropriation of land or any right

in land by the Minister for Public Enterprises on behalf of Broadband Infraco

(Proprietary) Limited; to provide for the conversion of Broadband Infraco

(Proprietary) Limited into a public company having a share capital incorporated

in terms of the Companies Act, 1973; and to provide for matters connected

therewith.

PREAMBLE

SINCE the State intends to expand the availability of access to broadband electronic communications networks and services to

uUnderdeveloped and underservicedd[c2] areas, thereby to ensure that the bandwidth requirements for specific

projects of national interest are met;

AND SINCE the State intends to acquire Broadband Infraco (Proprietary) Limited and

its electronic communications infrastructure to serve as the electronic communications infrastructure that

will enable the State to provide affordable access to broadband electronic communications networks and services,

BE IT THEREFORE ENACTED by the Parliament of the Republic of South Africa,

as follows:—

Definitions

1. In this Act, unless the context otherwise indicates—

‘‘Authority’’ means the Independent Communications Authority of South Africa

established by section 3 of the Independent Communications Authority of South

Africa Act, 2000 (Act No. 13 of 2000);

‘‘Broadband Infraco Limited’’ means Broadband Infraco Limited, a public

company having a share capital incorporated in terms of the Companies Act;

‘‘Broadband Infraco (Proprietary) Limited’’ means Broadband Infraco (Proprietary)

Limited, a private company duly incorporated in terms of the Companies

Act;

‘‘Companies Act’’ means the Companies Act, 1973 (Act No. 61 of 1973);

‘‘Constitution’’ means the Constitution of the Republic of South Africa, 1996;

‘‘conversion date’’ means the date determined by the Minister in terms of section

9(1);

‘‘electronic communications’’ means electronic communications as defined in

section 1 of the Electronic Communications Act;

‘‘Electronic Communications Act’’ means the Electronic Communications Act,

2005 (Act No. 36 of 2005);

‘‘electronic communications facility” means an electronic communications

facility as defined in section 1 of the Electronic Communications Act[c3] ;

‘‘electronic communications network’’ means an electronic communications

network as defined in section 1 of the Electronic Communications Act;

‘‘electronic communications network service’’ means an electronic communications

network service as defined in section 1 of the Electronic Communications

Act;

‘‘electronic communications service” means an electronic communications

service as defined in section 1 of the Electronic Communications Act[c4] ;

‘‘Eskom’’ means Eskom Holdings Limited, a public company duly incorporated

under the Companies Act, and any of its subsidiary companies;

‘‘Expropriation Act’’ means the Expropriation Act, 1975 (Act No. 63 of 1975);

‘‘Infraco’’ means Broadband Infraco (Proprietary) Limited and, with effect from

the conversion date, Broadband Infraco Limited;

‘‘Infraco claims’’ means all amounts owing by Infraco to Eskom as at midnight on

the day immediately before the transfer date;

‘‘Infraco interests’’ means those Infraco claims and assets, liabilities, rights or

obligations determined in terms of section 3(1)(a) or 3(2), as the case may be, to

constitute Infraco interests;

‘‘Infraco shares’’ means all the shares in the capital of Infraco of which Eskom is,

immediately before the transfer date, the registered and beneficial owner;

‘‘Minister’’ means the Minister responsible for Public Enterprises;

‘‘Public Finance Management Act’’ means the Public Finance Management Act,

1999 (Act No. 1 of 1999);

‘‘State’’ means the Government of the Republic of South Africa acting through the

Minister;

‘‘this Act’’ includes any regulation made in terms of section 11;

‘‘transfer date’’ means the date on which the transfer of shares and claims is

finalised under an agreement between Eskom and the State;

‘‘Transnet’’ means Transnet Limited, a company duly incorporated in terms of

section 2 of the Legal Succession to the South African Transport Services Act, 1989

(Act No. 9 of 1989), and any of its subsidiary companies.

[“Utility rate of return” means a rate that allows for recovery of operational expenses, repair and maintenance costs as well as the cost of future investment. (to be refined[c5] )].

Objects of Act

2. The objects of this Act are to provide for the—

(a) transfer of Infraco shares and Infraco interests from Eskom to the State;

(b) licensing of Infraco[c6] ; and

(c) conversion of Infraco into a public company with share capital.

(d) Expropriation[c7] .

Transfer of Infraco shares and Infraco interests[c8]

3. (1) The Minister and Eskom, with the concurrence of the Minister of Finance, must

determine by agreement—

(a) which Infraco claims and assets excluding licences , liabilities, rights or obligations of Eskom[c9] , in

connection with Infraco constitute Infraco interests; and

(b) the consideration payable for the transfer of Infraco shares and Infraco

interests to the State.

(2) If the Minister and Eskom cannot agree on any matter referred to in subsection (1),

that matter must be finally determined by the Minister with the concurrence of the

Minister of Finance.

(3) With effect from the transfer date—

(a) the State becomes the sole shareholder and member of Infraco; and

(b) the Minister exercises all the rights attaching to Infraco shares and Infraco

interests on behalf of the State, including the rights as shareholder and

member of Infraco.

Main object and powers of Infraco

4. (1) The main object of Infraco is to provide bulk broadband connectivity services by means of its long –distance facilities at the lower than commercial costs at a utility rate of return and on a non-discriminatory basis in terms of the provisions of the Electronic Communications Act.

~~affordable~~ ~~broadband~~ ~~access~~ ~~to broadband electronic~~ ~~communications~~ ~~networks and services, and in particular~~

~~(a) Infraco will provide non-discriminatory access to its electronic communications~~ ~~facilities and~~ ~~networks; and~~

~~(b) Infrao will provide access to its electronic communications~~ ~~facilities and~~ ~~networks at cost based pricing~~.

(2) For the purposes of section 33(1) of the Companies Act, none of the objects

ancillary to the main object of Infraco are excluded.

(3) The powers of Infraco include the common powers contained in Schedule 2 to the

Companies Act and none of those powers are excluded or qualified.

(4) With effect from the transfer date the Minister may, in consultation with the

Ministers of Finance and of Communications and subject to the Public Finance

Management Act, in one or more transactions transfer the whole or any part of the

shares, assets, rights, obligations or interests of the State in relation to Infraco to such

transferees as the Minister and the Ministers of Finance and of Communications deem

in the public interest.

Borrowing powers of Infraco

5. Subject to the Public Finance Management Act, Infraco may borrow money, issue

a guarantee, indemnity or security or enter into any transaction necessary in order to

achieve its objects referred to in section 4.

Infraco licence

6. (1) Subject to subsection (2) and with effect from the transfer date, Infraco must be

regarded as having been granted an individual electronic communications network

services licence contemplated in section 5(3) of the Electronic Communications Act by

the Authority.

(2) The Minister of Communications must, after consultation with the Authority and

within six months after the transfer date, instruct Infraco to submit all the necessary

documents required by the Authority in order to allow the Authority to publish in the

Gazette information in respect of the licence referred to in subsection (1), which

information must include the terms and conditions for the licence contemplated in

section 8 of the Electronic Communications Act. [to be discussed after Cabinet decision]

Servitudes

7. (1) For the purposes of this section, ‘‘servitude’’ means any servitude, lease, right

of use or other real right in or over land in favour of Eskom and Transnet, which existed

immediately prior to the commencement of this Act, for the conveyance or provision of

electricity, or telecommunications or electronic communications, for pipelines, railways, transport or electrical

substations or for the construction, use and maintenance of electronic communications

facilities or networks.

(2) With effect from the transfer date and subject to subsection (3)—

(a) every servitude is hereby extended so as to include—

(i) the additional right to use the land to which such servitude relates for the

purposes of using and maintaining existing electronic communications

facilities and networks and of providing electronic communications network services and electronic communications services;

and

(ii) the right of entry upon such land, and to construct, erect and maintain

thereon further electronic communications facilities and networks;

(b) Eskom and Transnet must allow Infraco in respect of any servitude to—

(i) utilise such servitude in respect of the additional right referred to in

paragraph (a) on such terms and conditions as may be agreed upon

between Infraco and Eskom or Transnet, as the case may be, and in the

absence of agreement, on such terms and conditions as the Minister may

determine; and

(ii) utilise such servitude in respect of that additional right in favour of

Infraco to provide electronic communications network services and electronic communications services in order

to fulfil its objects and to exercise its powers under this Act and its

founding documents; and

(c) Transnet must register servitudes in respect of land owned by Transnet in

favour of Infraco.

(3) (a) Compensation as contemplated in section 25(3) of the Constitution must be

paid by Infraco in respect of the additional right contemplated in subsection (2)(a)(i) to

the registered owner of the land in question for the use of such additional right to the

extent that the said additional right renders the servitude more onerous than the original

servitude.

(b) Notice of the exercise or use of the additional right by Infraco in terms of

subsection (2)(b) must be given by Infraco in writing to the registered owner of the land

in question before the commencement of such exercise or use, either by personal service

or by pre-paid registered post to the postal address of such owner, and the compensation

contemplated in paragraph (a) is payable and must be assessed as at the date of such

commencement.

(c) Sections 9, 10, 11, 12(3) and (4), 14 and 15 of the Expropriation Act apply with the

changes required by the context in respect of any compensation claimed, compensation

offered and the payment and determination of such compensation as if the notice

contemplated in paragraph (b) were a notice of expropriation in terms of section 7 of the

Expropriation Act: Provided that any reference in the said sections to compensation as

provided for in section 12(1) and (2) of the Expropriation Act must be construed as a

reference to the contents of section 25(3) of the Constitution.

(d) Section 8(7) applies to the assessment of the amount of compensation to which the

owner of the land in question is entitled in terms of paragraph (a).

(e) The Registrar of Deeds must, upon the lodgement of the necessary deeds and

documentation, make such entries or endorsements in or on any relevant register, title

deed or other document in the Registrar’s office or submitted to the Registrar as the

Registrar considers necessary to give effect to subsection (2).

Expropriation of land or right in land by Minister on behalf of Infraco

8. (1) If Infraco satisfies the Minister that it reasonably requires any particular land or

right in land for public purposes or in the public interest and for the attainment of its

objects and that it is unable to acquire such land or right in land on reasonable terms, the

Minister may expropriate such land or right in land on behalf of Infraco, subject to the

obligation to pay compensation as contemplated in section 25(3) of the Constitution.

(2) If the Minister expropriates any land or right in land on behalf of Infraco, Infraco

becomes the owner thereof on the date of expropriation contemplated in section 7(2) of

the Expropriation Act.

(3) The fees, duties and other charges that would have been payable by Infraco in

terms of any law if it had purchased that property must be paid in respect of the

expropriation of any land or right in land in terms of subsection (1).

(4) Infraco must refund all costs incurred by the Minister in the performance of his or

her functions in terms of subsection (1).

(5) Subject to section 25(2) of the Constitution, sections 6, 7, 8, 9, 10 11, 12(3) and

(4), 14, 15, 18, 19, 20, 21 and 23 of the Expropriation Act apply, with the changes

required by the context, in respect of an expropriation in terms of subsection (1):

Provided that any reference in the said sections to compensation as provided for in

section 12(1) and (2) of the Expropriation Act must be construed as a reference to the

contents of section 25(3) of the Constitution.

(6) Any unregistered right in respect of the expropriated land or right in land must be

expropriated separately and the sections of the Expropriation Act referred to in

subsection (5) apply with the changes required by the context to such expropriations.

(7) In assessing the amount of compensation contemplated in section 25(3) of the

Constitution, to which a person is entitled, section 12(5) of the Expropriation Act must

be applied inasmuch as it is just and equitable to do so: Provided that the reference to an

unregistered right in respect of any other property in section 12(5)(e) of the

Expropriation Act does not apply.

(8) This section applies to Infraco only for as long as the State is the majority

shareholder in Infraco.

Conversion of Infraco into public company

9. (1) After the transfer date, the Minister may on behalf of the State request the

Registrar of Companies in writing to convert Broadband Infraco (Proprietary) Limited

into a public company having a share capital in accordance with the Companies Act.

(2) The request must be accompanied by the memorandum and articles of association

of the intended public company that must be—

(a) framed in accordance with the Companies Act, but subject to this Act; and

(b) signed by the Minister on behalf of the State.

(3) On receipt of the request and the memorandum and articles so signed, the

Registrar of Companies must—

(a) register the conversion of Broadband Infraco (Proprietary) Limited into a

public company having a share capital, as well as its memorandum and

articles; and

(b) issue an amended certificate of incorporation.

(4) The name of the public company referred to in subsection (3)(a) shall be

Broadband Infraco Limited.

(5) No additional fee referred to in section 63(2) of the Companies Act is payable in

respect of the registration of the memorandum and articles referred to in subsection

(3)(a).

(6) The Registrar of Companies must issue such directives and authorise such

deviations from the regulations in force in terms of the Companies Act and the

documents prescribed in terms thereof as he or she may consider necessary in order to

give effect to this section.

(7) Sections 32, 44(1), 54(2), 66, 190 and 344(d) of the Companies Act do not apply

to Broadband Infraco Limited for so long as the State holds 75 per cent or more of the

total issued ordinary shares in the company.

Effect of conversion

10. The conversion contemplated in section 9 does not affect—

(a) the continued corporate existence of Infraco under the Companies Act;

(b) any rights, liabilities or obligations acquired or incurred by Infraco before the

conversion date; and

(c) the terms and conditions of service of any employee of Infraco.

Regulations

11. The Minister may, by notice in the Gazette, make regulations regarding—

(a) the procedure to be followed by Infraco in respect of a request to the Minister

for the expropriation of land or a right in land contemplated in section 8 and

in respect of the refunding of costs incurred by the Minister contemplated in

section 8(4); and

(b) any ancillary or incidental administrative or procedural matter that it is

necessary to prescribe for the proper implementation or administration of this

Act.

Amendment of laws

12. With effect from—

(a) the transfer date, the Public Finance Management Act is hereby amended by

the insertion in Schedule 2 after item 11 of the following item:

‘‘11A. Broadband Infraco (Proprietary) Limited’’; and

(b) the conversion date, the Public Finance Management Act is hereby amended

by the substitution in Schedule 2 for item 11A of the following item:

‘‘11A. Broadband Infraco Limited’’.

Short title and commencement

13. This Act is called the Broadband Infraco Act, 2007, and comes into operation on

a date determined by the President by proclamation in the Gazette.