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THE government says it has not yet selected the "lead agent" for its R740m municipal broadband project, despite indications that Telkom could win the deal.

At the 2015 state of the nation address, President Jacob Zuma said the government had "decided to designate Telkom as the lead agency to assist with (the) broadband roll-out".

Mr Zuma said last year that the first phase of the broadband roll-out would connect eight district municipalities in SA, ranging from Dr Kenneth Kaunda in the North West to Vhembe in Limpopo.

The announcement sparked concern from the Democratic Alliance (DA), which has asked why the project was not put out to an open tender, especially as the government owns 40% of JSE-listed Telkom.

On Thursday, Bloomberg reported that Telkom was said to be nearing sealing the deal and that the company had even "carried out site inspections and studied how to implement the plan in eight districts".

But the Department of Telecommunications and Postal Services says it has not yet selected the lead agent for the project.

"The lead agent in the roll-out of broadband through the government policy known as SA Connect has not been appointed yet," said Siya Qoza, a spokesperson for the department.

"The department is following due process to facilitate the roll-out of broadband for phase 1, which aims to link government facilities in eight rural districts to fast, secure and reliable internet," said Mr Qoza.

When asked if Telkom was in the running for the project, Mr Qoza refused to comment. He did not comment further when asked for more details on the department’s "due process".

Telkom also declined to comment on the matter after Fin24 sent the company a number of questions.

Mr Zuma, in his state of the nation address on Thursday night, briefly brought up the topic of the government’s broadband roll-out plan in two sentences.

However, his statement this year on the topic did not make mention of Telkom’s carrying out the roll-out.

"Government will fast-track the implementation of the first phase of broadband roll-out to connect more than 5,000 government facilities in eight district municipalities over a three-year period," Mr Zuma said.

"Funding to the tune of R740m over a three-year period has been allocated in this regard," he said.