Sentech 2009/10 Budget and Strategic Plan & Priorities

Meeting report

Chairperson’s introduction
Mr Vadi (ANC) welcomed the Sentech team, members of the board and the CEO the meeting. He wanted to put on record that ICASA would be coming the following week and he would like all councilors to be present as there were some important issues that the committee needed to raise with them, and therefore 100% attendance was needed. Members were reminded that SABC and ICASA would present jointly on Thursday and he anticipated that it would be a long session. Because caucuses were scheduled for the morning, the committee meetings would run from 2 o’clock until such time as required.

Before handing over to the Sentech team, Mr Vadi raised the fact that he had been told that Sentech had bought tokens of appreciation or gifts for committee members. He reminded all the members, in particular the new members, that these must also be declared in the Register of Members Interests and that it was important to do so as soon as possible. He expressed his personal view as being reluctant to accept gifts from any state owned entity because public funds were being used. If this was part of the normal corporate branding items that would normally go out to stakeholders, he had no problem with this. But if these were specialized gifts that were especially brought, he was not comfortable. His view included gifts from private operators. He reiterated that this was his personal view and suggested a few minutes were spent deliberating this. He again said that as a general view he would avoid accepting very expensive gifts as he felt this would not set the correct tone and create problems for the committee. He quoted an example of a private operator offering a sponsorship for the Rugby World Cup for a previous member, which would had totaled in excess of R100 000. For Mr Vadi this raised moral and ethical questions. Acceptance of small tokens was fine, but he felt that the committee needed to take a view on specialized items so that the benchmark was the same for everyone.

Ms Morutoa (ANC) said that she did not feel it was the time to deliberate on the matter, but felt it did need to be discussed at some point as there were rules in Parliament that served in the interest of the members.

Mr Bonhomme agreed that the matter should be discussed, but with members only present and not in front of visitors.

Mr Vadi agreed to flag the issue for open discussion with opposition members as well.

Sentech presentation to the Portfolio Committee on Communications
Mr Colin Hickling, Chairperson: Sentech Board, accepted Mr Vadi’s points about gifts and gave his assurance that theirs were normal corporate gifts. He congratulated Mr Vadi on his re-election as chairperson, and remarked that their past association had been a good and positive one.

He expressed Sentech encouragements by the President’s commitment of government to expand broadband capacity and to ensure that rural areas were not left behind. He was further encouraged by the ANC Polokwane resolution that Sentech was a strategic national asset that should be funded to execute its socio-economic mandate for the general public of SA – a resolution endorsed by the Cabinet last year

Shortfall in funding remained a serious challenge to accelerate Digital Terrestrial TV (DTT) broadcasting signal distribution and the rollout of national broadband wireless projects. Sentech remained appreciative of the funding made available as well as the efforts of the previous Minister and Treasury in this regard. He felt it was appropriate to acknowledge the role of the previous minister, and noted with sadness her passing.

Points noted were the successful switch-on of DTT, two days before the target date, DTT migration targets, broadband wireless projects, readiness for Confederation Cup and 2010 FIFA Football Cup, the importance of the socio-economic role played by Sentech if given appropriate funding and other necessary support. Mr Hickling said that these issues had all been previously raised but what he felt was worth noting was that the old analogue network was operating at required customer level, with television operating at 99.8% availability and radio at 99.7%. During the past year Sentech had commissioned 19 community radio stations, 1 community television (Cape TV), rolled out low power transmitters in the Karroo and Kalahari which gave access to TV and radio, and were currently rolling out in Limpopo, Mpumamlanga and KZN

He wished the President and new government, in particular the Minister of Communications and his Deputy, an effective term of office. He pledged Sentech’s support to government. He then introduced the Sentech team.

Dr Sebiletso Mokone-Matabane, CEO of Sentech, referred to the fact that Sentech were originally a broadcasting entity and were later awarded telecom licences. The Electronic Communications Act (ECA) then accordingly changed the business and objective of Sentech to “provide electronic communications services and electronic communication network services” embracing the whole issue of convergence variance.

Dr Mokone-Matabane again highlighted Sentech’s achievements: for television the SMA for customers achieved was 99.8%, the target for radio 99.7% was achieved, and for VSAT 99.6% was achieved. She attributed this to the competence and commitment of Sentech’s people.

Dr Mokone-Matabane then referred to DTT and that Cabinet had stated that it had to switch on on 1 November 2008. Sentech were able to do that 2 days before the due date. This happened at an International summit that was held in South Africa - and for the first time on the African continent - and it was indeed a momentous and proud moment for the company. Sentech had set the target for DTT at 40% of the population by 31 March 2009. However, due to delays in finalizing the frequency plan and due to the fact that some of the equipment they received was frequency specific, that target was not met. However, 33% was achieved, and given the challenges Sentech believes that they were right on target.

For the 2010 FIFA World Cup, a number of projects had been completed on time:

The land at NASREC had been acquired through the Department of Public Works on a lease basis. They were trying to secure a long term lease if they were not able to procure the property completely. She expressed her belief that things would work out well. The network and technical design for this second teleport had also been finalized. She stated that they had achieved what they had said they would for the past financial year and did not anticipate any difficulties moving forward.

In terms of the Confederations Cup, Sentech achieved the target of providing satellite infrastructure for the games. The stadium at Mangaung, Royal Bafokeng in North West, Ellis Park and Loftus had been completed. Sentech handed over to FIFA on 11 June 2009, and everything worked out very well.

In terms of retail broadband, Sentech had taken a decision to exit retail as reported before and were in the process of implementing this exit. Sentech had financial write offs for the assets they were using for this particular project.

In terms of the National Broadband wireless infrastructure, the objectives were that the DoC and National Treasury had to approve the business and funding model. The implementation of the rollout to schools, to hospitals - especially in rural areas - to some community centres, and travel and government offices was supposed to show some milestones by 31 March 2009. Dinaledi school were supposed to be the hub to which to rollout the wireless technology. The objective they had set for themselves was that the schools and government facilities within a radius that would receive the signal would also be covered through the Dinaledi schools. They had reported in the past that Sentech needed funds to rollout to these facilities, mindful of the fact that economically they were not in a position to really pay for themselves. The private sector was reluctant to go there as these were not really areas that would provide a good return on investment. Yet those services were needed as the President had reiterated in his State of the Nation address.

Sentech did receive some funding to the value of half a billion rands. The Board allowed the company to proceed and plan for the rollout using part of that money, but they were currently in discussion with the Department of Communications (DoC) and National Treasury (NT) to secure a commitment – even though the funds were not necessarily needed immediately – but to know the roadmap was clear in order to proceed with the rest of the project.

Dr Mokone-Matabane commented that in terms of financial performance, Sentech anticipated a loss of R59 million. Financially they would be independent in seven years with no dependency on the fiscus if the funding model for the National Broadband wireless was approved.

Dr Mokone-Matabane turned the attention to Sentech’s other achievements, the first being the expansion of the infrastructure. She said it was interesting to note that when they went to Kgalagadi the people there said that for the first time they felt that they were South Africans because never before had they received any broadcast of South African television. Many of the radio services that Sentech provided to people in South Africa had not been experienced by these people because the network was out of reach. It had really been very meaningful to people in outlying areas. She referred to another example of a person saying they had never seen the South African President. They had heard his name, but had never seen him and could not put names to faces - until the infrastructure was expanded. She expressed the hope that they would work with the SABC to do more of this kind of work.

Dr Mokone-Matabane continued, saying that the Mpumalanga schools project was going very well. An additional contract had been signed to expand VSAT to connect the schools. In addition some of the government offices, like the Home Affairs offices, especially at the border posts, had been connected through VSAT at post offices. She added that the South African Weather Service, in light of global environmental changes, was also pleased by this.

She then addressed the External Environmental impact on Sentech. She commented that having the DoC Minister as Sentech’s shareholder and policy maker was a sensitive position to be in. However, Sentech believed that it was a tension of which the Minister was aware, and felt he was competent to deal with this tension. She pointed out that Sentech would approach the shareholder as a shareholder, but sometimes the shareholder was a policy maker. Other players in the market would approach the shareholder as a policy maker. But Sentech was indeed mindful of the fact that the overall interest was also the expansion and growth of the ICT sector in the country.

Dr Mokone-Matabane stated that they had come to the Committee previously to talk about the need for DoC and the Minister of Finance to come to some agreement on how Sentech would be funded, especially because the socio-economic mandate was not financially profitable for Sentech. She believes that as much as government had to invest in schools and hospitals, if there was to be a development of rural and outlying areas, government had to invest in that infrastructure. She was hopeful that these discussions would be taken further under the new administration once time had been given for them to understand the lie of the land. She expressed hope of a resolution.

Sentech believed that there needed to be better co ordination of ICT strategy for the country. For government, greater clarity on the role of Sentech, Infraco, SITA, the municipalities, in the rollout of this infrastructure had to be achieved, because in a sense it was all public money. She reiterated that better coordination would be much appreciated because there were limited frequencies and there was a need to be efficient in how the frequencies were used, as well as public funds.

Dr Mokone-Matabane went on to mention ICASA’s intention to regulate broadcasting signal distribution tariffs. She wanted to mention to the committee that Sentech had engaged an international company to assist them in developing the new tariff regime for the digital environment. Much headway had been made and it had been discussed with their consultants and the broadcasters that at some point there would be a roadshow. Discussions would be held with the international consultant and broadcasters ensure that when the tariff was presented there would be clarity and understanding of the basis on which the tariff was decided. ICASA would also be visited so that they could also pose questions about this to the consultants.

She presented to the Committee a request for funding for the process of dual illumination during the period that both analogue and digital television infrastructure would be run. Some funds had been allocated but not complete funds. Some broadcasters had said that they were already paying for the analogue infrastructure so for them to pay double did not make business sense on their part. As more people had analogue, something had to give. While the government had already allocated R330 million, there was a shortfall of R558 million. Sentech hoped for a resolution to that.

Dr Mokone-Matabane addressed the internal environmental overview, stating that Sentech maintained its broadcasting and telecommunications network efficiently and hoped to continue to do that. Sentech had looked at FM, SW and AM radio networks and believed that in the next five years these needed to be upgraded in order to continue to provide services to customers.

Sentech had also been affected by the national skills gap. Due to skills shortages, retention of Sentech staff was somewhat problematic as they do not have the deep pockets that some of their competitors had. She supposed that, like ICASA, they were a training ground for others. While it was part of the territory it remained a challenge that they were trying to manage. Some key staff were close to retirement and it was hoped that ongoing training of staff would ensure that there were not gaps. She commented that perhaps the time was right to pass on new skills as this coincided with the migration from analogue to digital TV and newer skills had to be developed.

The CFO, Mr Siddique Cassim, presented the financial report (see document). He emphasized that the cash flow looked strong, but that this was skewed. This cash position included funding for DTT 2010, but this funding was ringfenced and had very strict limitations on its spending. The monies could not be used for normal business.

Ms Beverly Ngwenya presented the key technical projects and commented on the status of the projects (see document).

Conclusion to presentation
Dr Mokone-Matabane stated that:
1. The broadcasting signal distribution was profitable;
2. Telecoms could be profitable, subject to funding, both financially and on socio-economic delivery;
3. Sentech believed there were some policies threatening the core, but they plan to manage these;
4. The shareholders (DoC and government) need to come to a resolution on what the mandate of State Owned Enterprises (SOEs) in the sector was as Sentech could not do everything;
5. The DoC, in particular the Minister, would hopefully pay attention to confirming the mandate due to the need to be efficient in the use of public funds.

Mr Vadi (ANC) thanked Sentech for the clear and concise presentation and asked if there were any questions from committee members. He commented that there were some concerns.

Discussion
Mr Bonhomme (ANC) raised a question about Sentech’s staff contingency. He asked if there were currently any vacancies or not.

Dr Mokone-Matabane responded to this question, answering that they currently employed 540 staff. She said that occupational levels were the same as the Department of Labour. Some vacancies did exist. Some of these vacancies were caused by the movement from retail to wholesale. As a result of this move there was no longer a need for as large a marketing and sales department. Sentech therefore did not plan to fill these vacancies as they were no longer necessary. They were currently going through the agency to see where they could reduce their overhead costs simply because they no longer require the same numbers of people. It was not a matter of retrenching people, it was simply a matter of restructuring and moving people around to ensure that the organization was efficiently run.

She again mentioned the in-house training programme and progression plan for people in technical areas to ensure that they progress professionally up the ranks as they develop more skills. They required their employees to display competency in order to move up. Sentech remained committed to ensuring that employees had the requisite skills.

Dr Mokone-Matabane added that Sentech had a contract with the State Information Technology Agency (SITA) where interns were placed and had adhered to the agreement that 50% of the interns were women.

Sentech tried to retain interns after the training programme. However, if vacancies did not exist, they were put on a rotational basis in order to work in various departments and gain work experience until a vacancy came up.

Mr Kholwane (ANC) posed a question around the relationship of Sentech with the Department as they grapple with the issue of their mandate on ITC strategy.

Dr Mokone-Matabane responded that they did have a relationship with the Department and did meet about the Dinaledi schools.

Mr Kholwane asked for clarity on the issue around broadcasters as Sentech had indicated that there might be complaints that they have to pay twice as they were currently under both the analogue and digital regime. He asked what it would mean if Sentech were not allocated the funds for the migration from analogue to digital. He expressed concern over what would happen if Sentech did not get the required allocation for the migration. He also went on to ask about the balance sheet and the interest generated on the half a billion rands. How did this impact on the balance sheet and whether it made the balance sheet look better?

Mr Vadi (ANC) commented that there was both a new minister and deputy minister. He enquired whether there had been any progress on the policy regarding Sentech entering the private market or whether they should remain a public sector facility. He felt that the issues around the national wholesale broadband network (NWBN) seemed to hinge on this key policy question and this tension. He asked if they were moving to a resolution on this issue or whether it would remain a tug of war. He asked that some time be spent on that particular issue.

Mr Vadi commented that if there was not going to be more funding for NWBN, everything may be a pie in the sky. He expressed concern that they might be forced into an investment that would not yield the kind of results they would want, and that they would have to exit from this in 4 or 5 years’ time. He asked whether they could indeed enter this terrain, and if not, the plan would have to be reviewed. He asked whether Sentech could give insight into this issue.

He went on to state that as far as the Committee was concerned there had been no Cabinet approval of the Unhuru/BahariNet project. He asked whether this commitment had been on instruction from the DoC or whether Sentech had made this decision independently because they felt it made good business sense to commit R21 million of public money to this as opposed to other projects. He asked for Sentech’s opinion over and above simply acting on an instruction from the DoC. If it had been an instruction from the DoC, he felt it was necessary to establish whether it was a mandated instruction or something else.

Mr Vadi continued to express further concern over the fact that Sentech’s main client seemed to be the SABC. In the light of the SABC’s current financial problems he asked whether Sentech had received payments timeously from them.

He reiterated the need for full discussion on dual illumination.

Mr Vadi also asked whether targets for FIFA World Cup had been met and whether they were on course. He requested clarity on what exactly the commitments were and how far this project was.

He raised the issue of the financial loss for the past year and asked why it was that there was also a loss of R59 million shown for the current year.

Mr Hickling responded to this question by referring to the CFO’s explanation that Sentech had an accelerated loss of assets as a result of moving from retail to wholesale. There was also the necessity for the acceleration of the write off of assets of analogue equipment which come to an end in 2015. He stated that in terms of accounting practice policy it was necessary to do this. Those were book losses as reflected in the balance sheet.

Mr Hickling confirmed that the SABC was indeed Sentech’s biggest client. As they were a valued client he felt it would not be appropriate to pass too much comment on the current situation at the SABC. He said that to date the SABC were making their financial commitments to Sentech.

Mr Kholwane (ANC) responded to Mr Hickling’s comments regarding the SABC, stating that they simply needed to know what would happen if the SABC did not meet their obligations and asked whether Sentech would survive.

Mr Hickling responded that the company would probably not survive.

Mr Kholwane commented that this was more of a risk management issue. He asked whether Sentech had risk management in place to contemplate that issue.

Dr Mokone-Matabane responded that given the SABC’s expansive network - which accounts for more than 50% of Sentech’s revenue – Sentech was bound to be affected even with contingency measures in place. Sentech assumed that the government would intervene in such a case as the South African public would be affected if they had to switch off their network as a result of non-payment by the SABC. Sentech would not be in a position to make decisions on this alone. She stated that Sentech had met with the Minister of Communications where the issue was touched upon but they had agreed to have further discussion with the DoC on this matter. She anticipated that within 1 month they would have a contingency plan. She repeated that it would have a devastating effect on Sentech.

Dr Mokone-Matabeni then returned to previous questions raised.

In response to Mr Kholwane’s concerns about added costs around dual illumination, she explained that they currently had one network which was analogue. Since late October 2008 they had switched on the digital network. Sentech currently ran a pilot project for the broadcaster. Thus Sentech was running two networks. She stated that someone had to pay for the added electricity and added manpower that was required to maintain the infrastructure for this. The broadcasters said it was unfair for them to be obliged to pay for this digital infrastructure. While they believe it was a worthwhile project and they could see the benefits in the long term, in the immediate future, there were not any. When they sell advertising at the moment, they were looking at the analogue infrastructure as that was how they got their revenue. To have added costs for a digital infrastructure at the moment did not make business sense. Somebody therefore had to come forward and assist in this regard.

Dr Mokone-Matabane went on to say that European models did entice broadcasters with ‘carrots’ to entice them to migrate and that different jurisdictions used different methods. However, she pointed out that South Africa was a developing country and it was not always possible to follow the European example. In short, there were added costs and someone had to carry these costs.

Mr Vadi (ANC) interjected stating a concern that initially this pilot project was to be rolled out over 3 years. He now understood that this would have to be expanded to 5 years. His concern was that extended time meant extended costs, and as Sentech was already in a shortfall of R558 million, just who would cover this cost? The difficultly he had with Sentech was that these problems were put before the Committee – the various shortfalls – but he felt there should be some plan on the table. He asked at what point would decisions be made about these concerns so that they could get on with their work. He did not feel that from the Sentech team there was a way out of this.

Dr Mokone-Matabane explained that there was also a need for decoders which were not available from the manufacturers. If Sentech was ready with the digital switch on it was pointless if they could not proceed. Thus the problems became not only Sentech’s but the entire industry and government. Therefore the efforts of all in the industry and government was needed. They had not had confirmations of the decision that had been made. If funding were made available, it would be cheaper in the long term. Funding was required and those proposals had been submitted, and it was part of the issues raised with the new Minister and new administration. They would be meeting with the Minister shortly to address some of these issues that Mr Vadi had raised. She reiterated that Sentech could not resolve the issues alone and that decoders were needed.

Mr Hickling added to this debate stating that part of the dilemma of an organization like Sentech was that it took its direction from its shareholders. To a large extent the shareholder determined that they go in a certain direction like DTT, etc. A natural consequence was that funding would have to follow in order to implement the direction. He commented that if they were a stand alone board, they might well not be involved in some of the projects as they felt that if it was their money, they would not be investing in it. He pointed out that with the Dinaledi Schools Project, they were saying that R500 million for that project would not be where they would put their money. He believed that they had offered an alternative through VSAT – though acceding it was not the ideal way of doing it – and that it was simply a way of overcoming the project challenges. He felt that the company worked very hard in dealing with the shareholder and its shareholder representatives in trying to overcome these issues.

Mr Kholwane (ANC) commented that he felt that Sentech had tried to respond to questions raised but he asked if they might be in a box that they could not get out of. He observed that Sentech had indicated that these issues were more for the shareholder than the board to answer.

Dr Mokone-Matabane continued to respond to questions, addressing the issue around competition in the private sector as raised by Mr Vadi. She said that the issue of Sentech participating in the private sector had not been resolved. It remained an ongoing issue and the Minister had indicated that they needed to meet very soon on this. She pointed out that as much as Sentech was not able to compete in the private sector, the private sector was competing with Sentech on government business. Sentech should be allowed to enter the commercial market. The Minister had committed to getting to a resolution on the matter.

Mr Vadi commented that Sentech had control over the Spectrum. It was a very valuable asset but was not fully utilized at the moment. He asked if it could be leased to generate money for the company.

Dr Mokone-Matabane explained that it could not be leased as the regulator would say that if it could not be used, it needed to be given back. Sentech was going to talk with the shareholder about getting into partnerships with other entities to use it more efficiently. It had been agreed that this would be addressed seriously by the shareholder. If it were given back to the regulator, it would be lost.

Dr Mokone-Matabane then turned to Mr Vadi’s question as to whether Sentech had committed funding to the Uhuru/BahariCom project. She said that Sentech had not committed the funding and that the DoC had instructed that in line with its strategy to work with other African countries to increase bandwith not only in South Africa, but in other countries on the continent, that Sentech should work with BahariCom. It was necessary for the Board to interrogate the financial and business plan before making a recommendation to the Minister.

Dr Mokone-Matabane then asked Ms Beverley Ngwenya, COO of Sentech, to answer the question about the FIFA targets.

Ms Ngwenya explained that the mandate for 2010 was to provide backup satellite activities and to transmit images from the stadiums to the international broadcasting centre at Ellis Park and for 2010 World Cup Soccer in NASREC.

In terms of the targets the networks had been successfully handed over on 11 June to NASREC and FIFA and the targets had been met.

In response to what would be possible with the R500 million, Ms Ngwenya said that the shareholder had been given a number of options. One suggestion had been that something be done in one or two areas, but the question had been raised which areas these should be. The DoC had thus decided on the option that something had to be done in all nine provinces. The problem with this was that it was difficult to deal with a national network with too little money. The other option was connecting 500 schools immediately with another technology, which at present was VSAT.

Ms Morutoa (ANC) asked about Sentech’s intention to improve co ordination and overarching plans with the various department on ITC strategy. She pointed out that some of the departments were in rural areas and asked what Sentech had done about this, especially since it involved the budget.

Mr Vadi added that it was not helpful that the DoC had said that the Dinaledi project had to be taken on but that it was not prepared to commit money to this nor indicate from where the money was going to come. He asked whether Sentech should not be making a decision about this and questioned whether the Sentech Board should not make this decision and live with the consequences of the decision. He felt that either 270 schools or one or two provinces should be done properly. If that was the most cost-effective way of moving forward he believed that the obligation rested with Sentech to make the decision. He felt that Sentech should not sit back and wait for the shareholder to decide, but rather make a decision itself and push the shareholder. He felt that Sentech need to give their preferred option.

Dr Mokone-Matabane responded by saying that they worked within constraints. It was made clear that Sentech may not get into partnerships, trusts, incorporated joint ventures or similar arrangements without the explicit authorization of the shareholder with National Treasury. There were many opportunities for them to have done that, except they needed authorization. In the particular case of the Dinaledi schools, part of the challenge was that the shareholder was also the customer. Sentech had to listen to the customer and give the customer what the customer wanted. Sentech had put options on the table and had had interested parties but without written authorization of the shareholder and National Treasury. Sentech was not able to go ahead. She also added that this was the reason they had asked to be reclassified and further commented that they were in a sector that was very dynamic. If decisions take 2 years, opportunities would be lost. She reiterated that the company could be a lot more profitable if it were not for these constraints.

Mr Kholwane (ANC) asked what the disadvantages were in opting to go for the VSAT option instead of the NWBN.

Ms Ngwenya (COO, Sentech) said that units for VSAT would service only 1 client and only if more were put in, could more be serviced. Dr Mokone-Matabane added that it was also a question of time. She said that it would be an option to implement VSAT while rolling out NWBN so that communities did not have to wait, so finding a middle ground rather than an ideal solution would seem the best consideration while waiting for funds.

Ms Magazi (ANC) requested clarity on point 2 of slide 28 - the compromising of lower connectivity prices – and whether this had happened. She also raised the issue that the industry was known for poaching staff and asked whether Sentech had any retention strategy to ensure against this and so retain skilled staff.

Mr Mkhize (ANC) asked what would be the best way to proceed on the Dinaledi schools project which was a very expensive project. He continued on the matter of SKA, and South Africa’s bid for SKA to be located here. He wanted to know if communities had been engaged on the matter as this process inevitably delayed things. He would feel reluctant to support South Africa’s getting the bid if this was not on track, as South Africa might get a bad name as a result of non-delivery.

Responding to Mr Mkhize’s question about SKA, Dr Mokone-Matabane explained that the Department of Science and Technology had a plan to educate people in their respective areas about the project and consult with them. As far as she understood, some farms had been purchased and people had been relocated. Sentech had been working with their team on the technical side of this. Sentech had indicated to them that it would be necessary to work with the SABC from an early stage so that they too could assist with education and consultation on the matter. The DoC had also been involved in some of these discussions.

Ms Beverley Ngwenya (COO, Sentech) answered the questions on options for Dinaledi. There had been various options but the question was whether to do all provinces, or fewer. Sentech would suggest that the best option would be to cover 1 or 2 provinces very well.

On the question of retention of staff Dr Mokone-Matabane said that they acknowledged that people did not just leave for money and that environmental factors also played a part. Part of Sentech’s training strategy was to ensure that people did stay. DTT and 2010 were exciting projects that interested staff and people did stay because they wanted to be part of these projects. She added that Sentech also had a bonus scheme whereby staff who committed to Sentech for a number of years were awarded bonuses.

Ms Morutoa (ANC) again asked about the lack of co-ordination in the ICT strategy.

Dr Mokone-Matabane answered that the DoC had been in consultation with industry bodies and everyone had their own interests. In addition, municipalities must also have the competencies to roll out the infrastructure for this. The co-ordination issues were not only between the private and public sectors, but within the public sector there needed to be better co ordination. The Minister was looking at this in order to get better synergy at local, provincial and national level.

Mr Monde Ndleleni (Specialist stakeholder Relations, Sentech) added that for 2010 the DoC had established a subcommittee that worked on co-ordinating with provinces and local municipalities. On the Dinaledi project the DoC interfaced with other government departments. Sentech was also involved in another project under the auspices of the DoC that involved the Finnish government who had funded Limpopo and the Northern Cape in order to connect these areas.

Ms Magazi (ANC) communicated her concern regarding point 2 on slide 34 which stated that Sentech had to vacate the required frequency band used for radio and television transmissions by replacing current high power transmitters with numerous low power transmitters. She wanted to know how this would affect the communities. She also asked when a decision would be made about SKA and by whom.

Dr Mokone-Matabane said that the Cabinet would make this decision. They felt a need to begin to demonstrate to the international community that South Africa had the capability to do this. She then addressed the concerns around low power transmitters explaining that for broadcasting in a low site one simply needed more transmitters instead of just one. Therefore it would be necessary to do environmental impact assessments. Communities would get the same service, but it would be more expensive.

Mr Bonhomme (ANC) asked for clarity on why Sentech had been allocated R 21 million to participate in the EASSy undersea sub-marine cable, but then were instructed by the DoC not to participate in any cable but BahariCom/Uhurunet.

Dr Mokone-Matabane explained that EASSY was initially a project of NEPAD that enjoyed government support. Sentech allocated money to participate in EASSY as this would have been profitable because Bandwidth would had been cheaper than it currently was. However, along the way there were issues between NEPAD and the EASSY consortium. This was when BahahiCom/Uhurunet came up. The government wanted an open participation process as opposed to a ‘private club’ such as the case with SAT3. They wanted affordable connectivity that was also sustainable not only in South Africa, but also other African countries. When EASSY could not achieve this, South Africa started focusing on an alternative undersea cable in Bahari/Uhurunet. One was an undersea cable, the other was a telecom infrastructure. Government then said, through the DoC, that Sentech should participate in BahariCom/Uhurunet as it was the project supported by NEPAD even though they had initially supported EASSY. Dr Mokone-Matabane added that even though it would make business sense to continue with EASSY, the government had an agenda for South Africa and the continent. She felt that Sentech and the government needed to find common ground.

Mr Mkhize (ANC) wanted to know what Sentech’s view was on the issue of not being able to compete in the private sector. He wanted to understand the view of Sentech and the disadvantages of this decision.

Dr Mokone-Matabane said that in terms of the digital divide and Sentech not participating in the private sector, Sentech felt that there should not be any constraints regarding competing in the private sector in order to allow the company to make money and to make a profit. Sentech could then cross-subsidize some of the under-serviced areas. But if Sentech only focused on the under-serviced areas, they would remain forever dependent on government for that part of the business because it would not generate enough to be sustainable over time. If they had the discretion to compete in the private sector, Sentech would not be so dependent on funding. This would be the company’s preference. She added that there needed to be a sense of balance. If there was an opponent for PPP, for instance, they could develop rural areas and also make a profit.

Ms Magazi (ANC) referred to a meeting of the DoC on 11 June where an advisory commission to the President on ICT had been mentioned. She wanted to know whether Sentech had any relationship with that commission in terms of advising the President on policy issues and how the country should move on technology. She then commented that Sentech seemed to be an entity with huge potential to move technologically but that it seemed as if something was holding them back.

Dr Mokone-Matabane responded that Sentech had always been invited to the Inter-governmental Relationship Forum in order to talk about what Sentech could do to help. The last meeting that was held was in late March/April in KZN. The Minister of Provincial Initiatives asked Sentech to present. The Minister said that they needed to take it forward because he was concerned about rural development and they want to see how Sentech could assist. Sentech was hoping for a meeting before the end of June so that they could take up the discussion.

The former President had an International Presidential Commission on ICT. The people who sat on the commission were all international representatives. Sentech would be invited to interact with some of them when they were in the country, but on a limited basis. Dr Mokone-Matabane also sat on the local PMC. However, the commission had not met in quite a while so there had not been an opportunity to interact directly. She said there had been indication that this would change.

The meeting was concluded and adjourned.