South African Post Office Bill [B2-2010]: deliberations; Sentech Corporate Plan for 2011

This premium content has been made freely available

Communications and Digital Technologies

24 March 2011
Chairperson: Mr E Kholwane (ANC)
Share this page:

Meeting Summary

The African National Congress had suggested changes to certain clauses in the South African Post Office Bill during the meeting of the Committee on 18 March 2011. A document listing the changes was subsequently circulated to the Members. The Democratic Alliance objected to the deletion of the provision requiring the Minister of Communication to consult with the Minister of Finance on certain matters. Deliberations on the Bill would continue on 12 April 2011.

The Chairperson of the Sentech Board and the Chief Executive Officer briefed the Committee on the strategic plan for the period 2011 to 2014. The plan was aligned with the 2011 State of the Nation Address, the New Growth Path, the Medium Term Expenditure Framework budget allocation and the strategic objectives of the Department of Communications. The major corporate goals were the provision of infrastructure and services for the digital terrestrial broadcasting platform, the provision of broadband connectivity to rural and under-serviced areas and building an effective and efficient organisation. The performance indicators for the four key strategic objectives for stabilising the organisation, sustaining profitability, increasing customer satisfaction and retention and improving network performance were provided.

Budgeted revenue for 2011/12 was R816 million and operating expenditure was R762 million. A net profit of R72 million was forecast for the year. Total equity and liability amounted to R1.6 billion. Sentech anticipated continued profitability for 2012/13 and 2013/14.

Members congratulated Sentech on the significant progress made during the preceding year. Members asked questions about the capacity of the entity to implement the Digital Terrestrial Television program; the monitoring and evaluation of the program; the capital expenditure funding risk that was identified; the number and categories of jobs that would be created by the Sentech programs and the current status of the Screamer matter.

Meeting report

Deliberations on the South African Post Office Bill
The Chairperson took the Members through the Committee’s schedule for the forthcoming three months.

The African National Congress had introduced amendments to the provisions of the South African Post Office Bill during the Committee meeting held on 18 March 2011. A document listing the proposed changes was subsequently circulated to the Members.

After some initial confusion, Ms N Michael (DA) informed the Committee that the Democratic Alliance did not agree with the proposed deletion of the provision in certain clauses of the Bill that required the Minister of Communications to consult with the Minister of Finance.

The Chairperson requested that the suggested amendments were included in the Bill, for further deliberation by the Committee on 12 April 2011.

Corporate plan of Sentech for the period 2011 to 2014
Mr Logan Naidoo, Chairperson of the Sentech Board introduced the delegates from Sentech to the Committee.

Dr Setumo Mohapi, Chief Executive Officer, Sentech presented the briefing on the corporate plan for the period 2011 to 2014 (see attached document). Sentech was a state-owned enterprise operating in the broadcasting signal distribution and telecommunications sector.

The environmental factors impacting on the corporate goals of Sentech included the President’s 2011 State of the Nation Address, the New Growth Plan, the Medium Term Expenditure Framework (MTEF) budget allocation and the strategic plan of the Department of Communications (DOC). The major corporate goals were the provision of infrastructure and services for South Africa’s digital terrestrial broadcasting platform, the provision of broadband connectivity to rural and under-serviced areas and building an effective and efficient organisation.

Sentech’s public service mandate was governed by the Sentech Act, the Telecommunications Act and the Electronic Communications Act. An outline of the vision, mission and values of the organisation was provided. The business strategy was aligned with the key objectives of the DOC and focused on the consolidation of Broadcasting Signal Distribution products and services, the rationalisation of services, the implementation of the National Wireless Broadband Network (NWBN), preparing for commercial Digital Terrestrial Television (DTT) and evaluating business models for new network services. Details were provided of the flagship programs for DTT, NWBN and network infrastructure maintenance.

Sentech had identified four key strategic objectives, i.e. stabilising the organisation, sustaining profitability, customer satisfaction and retention and network performance. Details of the key performance indicators of each objective were provided. The organisational model was re-aligned with the new strategic direction of the entity.

The budgeted revenue for 2011/12 was R816 million. Operating costs for the same period amounted to R762 million. A net profit of R72 million was forecast. Total equity and liability were R1.6 billion. The budget forecasts for the 2012/13 and 2013/14 financial years were provided. Sentech was pleased with the progress made in turning the organisation around financially.

A risk management plan had been developed. The most significant risks were identified as the capitalisation risk, exchange rate fluctuations, a narrow customer base, skills capacity, revenue collection and increased competition.

Discussion
Ms Michael commended Sentech on the progress made during the preceding year. She noted a significant improvement in the organisation, particularly concerning the 95% improvement recorded in the collection of revenue. She appreciated that Sentech had identified problem areas clearly, for example the low rate of connectivity in schools in KwaZulu Natal.

Ms S Tsebe (ANC) asked if Sentech had the necessary capacity to implement the DTT program and if an adequate monitoring and evaluation tool was in place to ensure that the program would be successful. She asked if timeframes had been set for the action plan to mitigate the risk of insufficient capital expenditure funding.

Ms W Newhoudt-Druchen (ANC) asked for clarity on the legacy challenge of the Screamer matter. She asked for an explanation of the 20,000 projected number of non-Sentech jobs that was expected to result from the DTT program.

Mr C Kekana (ANC) asked what categories of jobs would be created. He regularly came in contact with the unemployed youth and asked where Sentech offered training programs.

Mr Mohapi replied that DTT was a major project for Sentech and the organisational strategy was developed to manage the project. Sentech had established a ‘war room’ where the latest information and data on the project was available at any point in time. Members of the Committee were invited to visit the facility, which would be opened in two weeks. A project team had been formed and oversight over the progress made was conducted by the Board. The project plan document was made available to the Committee and contained details of all the elements, locations and target dates of the project.

Mr Mohapi advised that the risk management plan had been presented to the Minister and to the DOC. The issues would be addressed during engagements with the shareholder. The major funding shortfall was for the implementation of the new standards and for the dual illumination phase of the DTT project. An additional broadcasting channel had to be made available. There was one year and nine months before the target date of December 2013 for the discontinuation of analogue signals. Sentech had developed a clear and detailed business case for the strategic programs. The Screamer matter had been referred to the Independent Communications Authority of South Africa (ICASA). Sentech was anxious to finalise the matter, which had already taken two years.

Mr Naidoo expected the Screamer matter to be finalised within two weeks.

Mr Mohapi referred Members to page 76 of the strategic plan document, where details were provided of the number and categories of jobs for each province was provided. Sentech was purchasing equipment and the engineering and electrical work on the towers was in progress. The detailed project plan included the costing of each phase of the project. The costs had been included in the financial plan of the organisation. The location, duration and extent of the workforce required for each element of the project had been determined. The antennae on each tower had to be changed, which was a highly skilled function.

Mr Kekana noted that the transmitters were imported and wondered if it would be possible for such relatively sophisticated equipment to be manufactured in South Africa in future. Job creation in South Africa did not benefit from the demand for imported goods. He felt that the attitude of South Africans needed to be changed as imported items were not necessarily better than locally-produced items.

The Chairperson agreed that Sentech had made much progress. He remarked that it would aid the Committee to consider the strategic plans of state-owned entities more efficiently if a best practice for such presentations could be followed. He thanked Sentech for the briefing.

The meeting was adjourned.

 

Present

  • We don't have attendance info for this committee meeting

Download as PDF

You can download this page as a PDF using your browser's print functionality. Click on the "Print" button below and select the "PDF" option under destinations/printers.

See detailed instructions for your browser here.

Share this page: