Sentech Annual Report 2010/11

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Communications and Digital Technologies

12 October 2011
Chairperson: Mr S Kholwane (ANC)
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Meeting Summary

Sentech presented its Annual Report for 2010/11, noting that the last couple of years had been a difficult period for the entity, but in 2010/11 it had managed to achieve substantially better, and the turnaround strategy was still continuing. The previous doubts expressed about Sentech’s sustainability as an ongoing concern had been addressed, and Sentech was both solvent, and had a vastly improved cash-flow, resulting from various cost-cutting measures, including closing some programmes, and that it had achieved an unqualified audit report, and where matters of emphasis were raised, it had an Action Plan and was working on those. Collection of debt had improved, both in numbers and in reduction of debtor-age. Increased performance, and over-achievement on several targets for several programmes, was noted. Network performance, measured in terms of availability, increased. Sentech was giving increasing attention to innovation, broadband and content management. It was now solutions-focused, rather than product-focused. It had improved risk management, was appointing a Risk Officer, and had fully-functioning Risk and Audit Committees in place at Board level. Where targets were not met, full reasons were given in the presentation The main areas related to the rollout of Digital Terrestrial Television (DTT), where Sentech had taken a conscious decision rather to await the new standards, and in Direct-To-Home satellites, where decoders had not been available. VSAT, used in support of schools, also had not reached targets, which was of concern to Sentech, although it outlined its attempts to negotiate with the provinces on this point. Gender equity targets were still problematic, but work was being done on this, and on reaching Level 4 BBBEE accreditation. Net profit had increased to R203 million, and cash flow was substantially improved. A full presentation was given on the instances of irregular, fruitless or wasteful expenditure highlighted by the auditors. There had been instances of fraud uncovered in respect of the Low Power projects, a forensic investigation was held, and staff were disciplined, fired and criminal and civil steps were being taken. Some of the matters involved the rendering of services and value for money achieved, although formalities were not complied with. The improvements made to Board and staff functioning, including the hiring of new staff, were outlined.

Members congratulated Sentech on the steps it had taken so far, as well as the obvious commitment of the Executive, and its commitment also to pursuing charges against previous fraudulent officials. They asked if Sentech would be ready for the switchover from analogue to digital television, what role Sentech could play in keeping the public informed, whether Sentech was in the meantime upgrading or maintaining old networks, and the future for radio. Members questioned what “60% coverage” meant and were told that this was “population coverage”, that the targets were set already in 2006, although it might have been preferable to use other indicators. Members asked if Sentech itself had found and reported the discrepancies to the auditors, asked about the cost of the interim risk manager, and asked questions around staffing and capacity, in particular the reasons for a 12% increase (which it was explained applied to bargaining unit staff, and was an attempt to even discrepancies), whether performance management informed staff increases, and the complaints by staff in KwaZulu Natal, who felt that they were not consulted or informed adequately of processes. Members were interested in training opportunities for staff, asked whether riggers were indeed being sourced from outside the country, asked about staff numbers in the provinces, and called for more comprehensive reporting, in future, on vacancies and filling of posts. Members pondered whether Sentech itself, and not SABC, should decide where the Sentech services should be rolled out, and heard Sentech’s willingness to be part of the new solution. Members questioned certain of the tables in the Annual Report, and made some suggestions for the future reporting. They also noted that the DOC was responsible for the release of the Broadband Plan and rollout of the Broadband Network, although Sentech had made its submissions to DOC, and it was noted that Sentech and the Minister had discussed the issue and agreed that there was an urgent need to address some difficulties that were being put in the way of Sentech. The Chairperson commented that the Department of Communications seemed to have capacity problems and needed to look more seriously at the integrated planning and resolution.

Meeting report

Chairperson’s opening remarks
The Chairperson noted that Sentech had received an unqualified audit report, but the Committee would be particularly interested in hearing about actual service delivery.


Sentech Annual Report 2010/11 Presentation
Mr Logan Naidoo, Chairperson, Sentech, noted that he had held office for only one month. He noted that in 2010/11 Sentech was solvent, to the extent of R740 million, was liquid, and showed profits of R72 million, although he did concede that operational performance had declined when cost-to-performance ratios were compared. In 2010, 56% of revenue was taken up in costs, but this rose to 64% in 2011. He noted that although Sentech had achieved an unqualified audit overall, there were some instances of non-compliance with the Public Finance Management Act (PFMA), noted on pages 112 and 113 of the Annual Report, but that Sentech was addressing these issues, as would be outlined later.

Mr Setumo Mohapi, Chief Executive Officer, Sentech, noted that he himself had joined Sentech in November 2010. This was a difficult period. The executive manager and staff had worked with the Board to restore Sentech’s financial stability and leadership position in the Information and Communications sector. During 2010/11 a corporate plan was developed but this was subsequently revised to try to achieve a more positive financial position, and this required that Sentech try to achieve targets for sustainability. The turnaround still continued, although there had been significant successes already. Its sound financial position of R363 million on the balance sheet would be used to fund broadcast operations. The doubts previously expressed about Sentech’s ability to remain as a going concern were now resolved, since Sentech had shown itself capable of generating income and maintaining good cash-flow. A number of loss-making operations, particularly telecommunications products for My Wireless, had been discontinued, as well as the retail products for the business community. The carriers’ business, which was also problematic, was stopped in this financial year. The collection rate moved from 75% to 90%. The age of debtors had decreased.

In relation to the products that Sentech would continue to offer, there had been improved performance. During 2009/10 there was a large charge into the income operations segment. Total operating revenue decreased because of discontinued products, yet those products were contributing to overall loss. He summarised that in the 2010/11 financial year, there had been several instances in which targets were exceeded. Network performance, measured in terms of availability, increased. The key assets were the network infrastructure, and staff. There was a 12.7 % increase in basic salaries. The Supply Chain Management function, which had been problematic in the past, was now under the direct supervision of the management committee. Sentech had not yet achieved the formal Black Economic Empowerment rating that it required, but had spent time and effort on this.

Sentech had tried to align itself with government programmes, and therefore there was increasing focus on innovation, broadband and content management in particular. Its mandate was to enable people to enter the ICT environment. It was now solutions-focused, rather than product-focused. Institutional risk management had been identified in previous audit reports as problematic, and these comments (by outside auditors) had been passed on to the Auditor-General South Africa (AGSA). This was now rectified. Sentech was paying more attention to staff issues, to try to address the instability of staffing in the previous years. The Board had also restructured its operations and was focusing on key matters, such as supply chain, ensuring that the technology strategy was in line with the mandate, the full functioning of the Audit Committee and the capacity.

The Key Performance Indicators (KPIs) were tabled. It was noted that the targets for service level availability and revenue were exceeded. 16 low-power transmitter sites were implemented, against the target of nine. The DTT matrix referred to the numbers of sites rolled out under the initial standards. This target was not met, but for specific reasons. It had been decided not to continue with this during the time that the change in standards was being discussed, an instead there would be work done on resolving the DVB-T2 upgrades.  Those sites would provide 60% coverage to the population. The FM radio availability targets were exceeded, with 99.9% coverage. There were also targets to support community broadcasters, particularly in licences for ad hoc broadcasting (for instance, during particular festivals) and those too were exceeded, as well as the targets for medium wave technology and short wave technology, although these were reducing each year. Sentech operated a satellite based broadcast platform, and these targets were exceeded. However, it had not met targets in Direct–To–Home Satellite, due to problems with the availability of decoders, and that had been reported upon separately. Business Television and business radio targets were exceeded. It had not achieved targets for VSAT. VSAT was being used in support of schools and clinics and so this was an issue of concern to Sentech, had been reported to the Board, and the Board was planning a turnaround strategy to address the problems. The Board was also trying to address the non-meeting of gender equity targets. In 2010/11, skills development targets were not met because during this year there had been much focus on reducing costs, and so several programmes were put on hold, but the programmes had since been revived. As reported, Sentech was still working to its Level 4 BBBEE accreditation.

Mr Mohapi noted that Sentech was required to be financially sustainable. The details on revenue were contained at pages 96 to 97 of the Annual Report. Revenue had increased slightly, and so had the costs, although R110 million of the costs related to the now-discontinued operations. The net profit increased to R203 million. That immediately impacted on the cash flow, as set out on page 101. There were, however, some charges in relation to the shutting down of products. The net increase in cash was R158 million and the net cash and cash equivalent totalled R1.13 billion, due to improvements in operations. He tabled the balance sheet details, highlighting increases in case and improvements in equity.

The details of the operating performance of each of the entities was tabled (see attached presentation, page 31). The Carrier of Carriers shutdown would be reflected in the next financial year.

The increase in staff costs was attributable to the increase in basic salary, but there was also a decrease in staff numbers. The most significant line was the expense relating to discontinued operations.

Sentech was audited by KPMG, with the consent of the Auditor-General. There had been irregular, fruitless and wasteful expenditure identified. A list of these instances was tabled on slide 34. The contract with Intelsat came to an end in September 2010. Because of Sentech’s instability, and possible laxity on the part of the previous leadership, no processes were started to get new contracts until May 2010. This did not leave enough time to change satellite provider, and the contract of five years that was proposed had not been approved by the Minister before lapsing. The Board had reviewed this, and the contract would be extended, but until approval was given it would be recorded as irregular expenditure. The Board had made application to National Treasury for condonation.

In regard to low power projects, the internal audit had investigated the capital projects and had uncovered some problems. A forensic investigation was held that uncovered more problems, and staff had been disciplined, fired and criminal charges were being investigated. Civil actions had also been instituted.

The remainder of the items listed related to commitments made with service providers where no contracts were signed. Some had already been reported to the Committee in October 2010. The Board had tasked some non-executive directors with specific functions, which was also reported upon in October 2010. There was a budget of R3 million for the turnaround, but this was not allocated to specific activities, and work was done but the budget was exceeded, to the tune of R8 million.  The auditors also noted fruitless and wasteful expenditure of R4.6 million, mostly in relation to lapses in the payment of taxes. The money had been returned to the fiscus, and disciplinary action had been instituted against the executives involved, in January 2011. The particular executive in charge of this function was released. He noted that some of the labour issues would be settled, rather than dragging them out at an increased cost. Although the auditors had not audited the 2010 FIFA Soccer World Cup expenditure, it was tabled, but there was a possibility that the spend could be greater than reflected here.

Mr Mohapi said that there were no material findings on the performance against pre-determined objectives, although some issues were raised around the risk and audit committees of the Board, who had not met often enough in this financial year. The Risk Committee was now functional and would meet four times a year. Sentech was aware that it must appoint someone to the risk function, had advertised, and had received 60 applications. In the interim the function would be filled by a contract employee. The Audit Committee had now noted that the audit plan had not, in the past, aligned with the risk function of Sentech, and this had now been addressed. The Audit Committee would also be called upon to approve the document on policy and procedures around performance appreciation, not previously approved by the Board. All quarterly reports were being produced. Members sat on both internal and risk committees to try to institutionalise the linking of risk and audit. The Audit Committee composition had been revised, to include sufficient numbers of people with a financial background.

Most of the findings of irregular, fruitless and wasteful expenditure in the past and current financial years were due to lack of capacity in the financial division. The Chief Financial Officer and two of the general managers had left, but a new Chief Financial Officer had now been appointed, who was busy capacitating his division. The Board had resolved on quarterly reports as well as monthly management reports in future.

The filling of senior positions, as noted in the audit report for 2010/11, had been attended to. The risk management position was temporarily filled and permanent appointments would soon be made to this position as well as the Chief Operating Officer.

Mr Mohapi added that there were some material misstatements identified during the audit process, again attributable to capacity issues. The lack of responsive oversight would be solved by the full functionality of the new committees. The capacity of the Human Resource (HR) division had also been problematic, and a new Executive of HR would join Sentech in November, as the previous incumbent had resigned in April. Sentech would need to identify and hire new talent and have a proper succession plan.

The last finding related to the fact that there was no central point for monitoring compliance, as only regulatory compliance was being monitored. In March, Sentech had said that this would be regularised. The position of Corporate Services was advertised internally, but no appointment was made from that, as the person identified as most suitable for appointment had since resigned, and it was now being advertised externally.

Forensic investigations into procurement were started in the previous financial year, and Mr Mohapi reiterated that those responsible for wrongdoing were fired, and criminal and civil actions were being pursued. 

Discussion
Mr N van den Berg (DA) congratulated Sentech on its summary of the findings on the audit report, and the action steps that it had taken to date, as comprehensively set out, to address the issues.

Mr van den Berg said that all entities were playing an important role in rollout of the Digital Terrestrial Television (DTT). He asked if all Sentech transmitters would be ready when the analogue signals were switched off in 2013, and if equipment needed was in place. He also said that there was uncertainty in the public about the switch-over and he asked if Sentech had a role to play in communication.

Mr Mohapi responded that the rollout could start between now and the following April. Sentech could certainly help to advise citizens, but the preparation that it did was entirely dependent on where the facilities would be made available. For instance, Sentech could advise the public on the kind of antennas and Set Top Boxes (STB) that they would require. The Minister had asked for, and been provided with information on rollout. The technical skills around the DTT project lay mostly within Sentech, but there was input to the South African Digital Broadcast Association on the lower level analysis of the transmission networks, to determine what aerials would work in what areas. The design work results were made available to the Department of Communications (DOC). He understood that there was still much work to be done. Sentech was working hard to reach the December 2013 deadline and would try to deliver what was required. It had ordered all the units to upgrade the transmitters, and they should be available by mid-November, and would start to be installed in December and January, with some other elements still to be added for full functionality. Whatever was done must be done correctly. Most of the work was now upgrading, as the contracts with suppliers were concluded some time ago.

Mr van den Berg noted also that the transmitter network was ageing and he wondered what attention was being given to upgrading the old transmitters.

Mr Mohapi confirmed that the old equipment would continue to be upgraded and maintained in the meantime, until December 2013.

Mr van den Berg asked about the future of radio and what was likely to happen with short and medium wave.

Mr Mohapi reported that digital radio was not in the pipeline as a policy at this stage, although there were some standards available for services on the short and medium wave range. Sentech would be ready to implement digital radio when the time came to do so.

The Chairperson said that on the previous day the Committee had asked a question of the DOC as to what “60% coverage” actually meant, as there was a distinction between geographic and population coverage. The DOC could not respond and he asked Sentech if it was able to give clarity on this point.

Mr Mohapi said that the presentation of Sentech’s quarterly report showed coverage, which was “population coverage”. This was a legacy issue dating back to 2006, when Sentech had started with conversion of analogue to digital by commencing the installation of transmitters at different sites. It would launch at places determined some time ago. The map (which he tabled again) showed coverage for DTT in April 2012. Almost all of Gauteng would be covered in 2012, and there would be good coverage in the western Free State, eastern areas of North West, and Mpumalanga, with quite good coverage in Limpopo. KwaZulu Natal (KZN) was to have less coverage, as would the Eastern Cape, the parts of Western Cape outside the Cape Town area, and Northern Cape (apart from Kimberley).  Every province would be covered. However, better coverage could have been achieved using better matrixes for coverage, perhaps the numbers of population in areas, which would have resulted in better geographic coverage in Northern Cape.

Ms S Tsebe (ANC) echoed congratulations for the good work that Sentech had done, including the intensive research and leadership. She did, however, want to know at what stage the Chief Executive Officer had become aware of the audit problems, and asked if the CEO himself had disclosed problems to the auditors.

Mr Mohapi said that in about mid-December, the mid-term audit process indicated some problems. He had been aware that the Risk Committee was not sitting at this time, and that there was a necessity to appoint a Risk Officer. He also said that he had picked up that the Policy and Procedure document had not been finalised by the Board. Sentech itself had also identified that there might be problems around the Low Power Project, but the links were not institutionalised in the process. Sentech itself had volunteered the information about the apparent discrepancies to the auditors, and the external audit team was invited to speak to the forensic team independent of any input or interference from Sentech management.

Ms Tsebe noted that there was an interim appointment to the risk position and asked how much was being paid for this appointment.

Mr Mohapi said that this information would be provided, but said that this was not a full-time appointment. In future, the new Risk Officer would monitor the control environment.

Ms Tsebe enquired about overall capacity issues. She noted that during the Committee’s oversight visit several problems were raised in KwaZulu Natal, including lack of capacity, lack of training and similar grievances. There were also complaints of a communication breakdown between Sentech management and staff. Staff had complained that no steps were taken to take staff through the plans for the future. She asked if this gap had now been closed.

Mr Naidoo said that steps were taken to inform the regions.

Mr Mohapi said that in KwaZulu Natal, Sentech had decided to try to reduce some costs and it had taken the decision to cut down on excess capacity. He noted that the way in which staff retention was addressed had indeed been problematic in the past, and there was little structure around benefits offered. The poor communication with regions had, however, now been addressed. The regional managers were involved in the development of corporate plan. In the first week of April, he had embarked on a roadshow, in which he had met every member of staff, and had presented the corporate plan to them, for the first time. This was intended to enable individuals to take more charge, and far more authority had now been given to regional managers. It would, however, take time to establish trust and for people to realise that they had the authority. The HR turnaround would be very important.

Mr D Kekana (ANC) asked for comment on any training and bursary schemes for staff.

Mr Mohapi responded that in the past there was little structure to the benefits, and that was potentially opening Sentech up to problems. Some had been sponsored to attend university courses. However, Sentech was hoping rather to design courses that were specifically geared to Sentech needs, which would enable it to use the limited resources for the benefit of more people. Sentech did already do extensive in-house training. Most staff were in the operations division and there was a full system of growth, with their promotion being dependent on passing competency tests. Another programme, which offered bursaries to staff members, to obtain formal training at universities, was not optimal, as that had resulted, in the past, in people perhaps studying for MBAs, but not dealing with issues during their courses specific either to Sentech or even South Africa, and then leaving Sentech for other companies. A better approach would be to offer courses specifically designed around Sentech’s own immediate requirements, but that could be treated as a credit towards a university course in future. The HR Committee of the Board was now involved in decision-making on this, to ensure that training opportunities were not abused. He added that it was unlikely that people from other entities could be seconded across to Sentech directly and be able to begin work without the need for specific Sentech-based training, although they would leave Sentech with broader skills that could be used elsewhere.

Mr Kekana asked for numbers to be given in future, both of students and the actual money spent. 

The Chairperson reminded Sentech that it should be able to access money for training through the Sector Education and Training Authorities.

Mr Mohapi said that this was being done, but some of the money was, as already outlined, being used to support one person through his or her university programme, which was not ideal.

Ms Tsebe asked who decided where Sentech would roll out its services. She had asked this question previously. She enquired if it was the DOC or SABC, and what informed the decisions that were taken.

Mr Mohapi said that it was mostly a decision made by SABC, who was the biggest user of the network. Insofar as the DTT network was concerned, other stakeholders’ requirements would also be included in the “mix”, as the same network would be used by others. The Public Service mandate requirements was, at the moment, carried by SABC. Insofar as the reasons for decisions were concerned, SABC had requested geographic representivity, to ensure that each province would receive coverage.

Ms R Morutoa (ANC) and the Chairperson asked if, in principle, it was not more correct that Sentech should have that mandate.

Mr Mohapi said that Public Service radio network was still run on the old lines. Sentech would certainly like to be part of the new solutions. It had designed extended coverage service plans to extend certain radio stations to other regions. He thought that Sentech had both the skills, and the desire, and could have a mandate to look at broader universal coverage for broadcasting and communications. Insofar as interaction with the SABC was concerned, he said that perhaps Sentech could be said to be ahead in its work, although Sentech had tried to convey some of the possibilities to SABC. He could follow up on that discussion.

Ms Tsebe noted that page 8 of the Annual Report contained a comment from the Chairperson about establishing an office of a non-executive Director, and she wondered if this was a personal view being expressed.

Mr Naidoo said that to an extent this fell under requirements of corporate governance and the new Companies Act, and some of the control environments could still be determined.

The Chairperson cautioned that Sentech should be very careful about non-executive directors becoming involved in the work of the organisation itself. The intention may be good, but perhaps there was a need to address the issues differently, and to consider whether there were options other than introducing an office, as this had been a source of conflict and problems and instability in other institutions, specifically the SABC.

Ms Tsebe asked that further clarity be given in relation to page 52 of the Annual Report, on the non-auditing of certain information.

Mr Mohapi noted that the auditors had not audited the expenditure from the 2010 World Soccer Cup, but that he had tabled this.

Ms Tsebe said that page 59 of the Annual Report contained a table which she did not quite understand, and she suggested that in future, in relation to staff, there should be a clearer indication of whether the vacancies had been filled.

Mr Mohapi said that this could be done in future. He explained that the vacancies had been filled by the non-executive directors who were present at this meeting.

The Chairperson noted that it was also necessary to show who was attending the meetings of the Board.

Ms Tsebe noted that on page 112, there was the comment “no action”, and she wanted further clarity on those points.

Mr Naidoo explained that this table set out irregular expenditure, and was a technical point. The services had been rendered by individual companies. Value for money was indeed received. However, due processes were not followed, and in no cases, apart from the Low Power Project, where steps were instituted, had there been any suggestion of fraud or criminal conduct.

Ms Tsebe also asked when further reports would be given “in the next reporting period”.

Ms J Kilian (COPE) agreed that credit was due to the current leadership for having taking specific action to implement a turnaround strategy.

Ms Kilian was pleased to note that Sentech seemed to have taken positive action to address the irregularities and to hold those responsible accountable, both criminally and civilly, commenting that there was a distressing tendency in the public service either to not pursue the issues fully, or to fail to take civil steps. She wanted assurance from all entities that they would show zero tolerance to corruption and stressed that action must always be taken against wrong-doers, irrespective of who people were, or their political affiliations.

Ms Tsebe asked why Sentech had decided to focus on cutting costs in the human resources area.

Ms Kilian understood that Sentech had opted for savings on employees. However, she wanted to question why such large increases were given, of over 12%, to those who remained. She asked if this was done on the basis of any performance evaluations. She asked if the performance management systems had been implemented, and, if not, what the delays were. She also asked if Sentech intended, in its turnaround plan, to retain specific skills in order to complete with the rest of the industry.

Mr Mohapi made some general comments on staff capacity. He noted that at executive level, there were shortages of staff, but the executive staff was merely working harder, and were in some cases doubling up on functions until the other key positions were filled. The HR Executive would assume office on 15 November. The management of projects was under a Business executive function, interviews were held and offers would be made by the end of October. Once the key executive positions were filled, the remaining positions would be filled.

Mr Mohapi then said that the salary increases had not, for the past two years, been performance based, but the next round of increases would be performance-based, across the field. A programme entitled “HR Intervention” would be instituted in the next quarter, which would attend to re-profiling of all staff, by external professions, so that new development programmes could be implemented. In the past, leadership had been reluctant to institute performance management systems. Insofar as the increases were concerned, he said that the 12% percentage increase applied to bargaining unit members, and was intended to correct past discrepancies between management and other staff salaries. Non-bargaining unit members received around a 8% increase. The entire chain had been re-examined. About 60% of Sentech had been with the organisation for several years, and there was a need to transfer skills.

The Chairperson warned that Sentech should not fall into the trap of letting people retire, then re-hiring them as consultants at a hugely inflated cost.

Ms Kilian asked whether there were sufficient controls in place over sick leave, overtime and other issues.

Mr Mohapi said that this data was referred to the HR Committee whenever it met.

Ms W Newhoudt-Druchen (ANC) referred to page 35 of the Annual Report, asking why there were only six staff in the Northern Cape, whilst there were numerous in smaller provinces such as Gauteng. She wondered if the numbers of staff were related directly to the broadness of signal distribution coverage.

Mr Mohapi said that the numbers of staff were related to the numbers of control centres in geographic regions. In the Northern Cape, there were about 15 transmission control centres, with one small centre in Upington. The Northern Cape, being flatter in aspect, could cover more areas from one centre, and there were also fewer radio services there. There were not as many television services as there should be, which was a problem, but the scope for broadcasting was still small. The Upington site was supported also by sites in Vredendal and the transmission control centre in Bloemfontein. In Gauteng, the Transmission Control Centre was placed because of the numbers of sites and services, including the Sentech Tower. In addition, some of the staff were located in Gauteng although the services were actually rendered in the neighbouring provinces. Head Office was also in Gauteng.

Ms Newhoudt-Druchen also referred to page 23 of the slide presentation, asking why there was under- performance areas on Home Satellite. She also noted that there appeared further losses on  slide 24, because of lack of availability of decoders, and enquired why these had occurred, particularly since the forecasts had been quite low to start with.

Mr Mohapi reiterated that this was because Sentech, although it had hoped to increase its profitability in this area, had in fact experienced some losses. In respect of the one area, Sentech had been unable to get decoders. That problem had since been rectified. It was now being managed in a proper way, without affecting other areas of Universal Service Coverage. In future, decoders would be available for people to use.

Ms Newhoudt-Druchen asked if the Carrier of Carriers service, noted on page 16 of the report, was now discontinued. She asked what had been done to improve the collection rate for debtors.

Mr Mohapi said that the Board had taken a specific decision, and implemented steps, for the improvement in debt. It had done so by re-examining and re-ordering the debtor list, and taking more aggressive steps to collect debt, or, failing this, to cut services, which then tended to result in payments being made. There was also more regular reporting.

Ms R Morutoa (ANC) also expressed appreciation for the current report, noting that some of the past reports had been poor. She urged Sentech to keep up the good work.

Ms Morutoa enquired about the digital infrastructure, saying that in the Estimates of National Expenditure it was noted that Sentech would establish 10 new radio transmitters, new TV transmitters, and low-power transmitters. She asked what corrective measures were taken to address target shortfalls and how many sites were rolled out by Sentech.

Mr Mohapi indicated that the target for new low-power stations in the last year was nine, but this had been increased, between Sentech and SABC, to 100 for this year and the following two years. In this year, Sentech had managed to establish around 50 stations. It did, however, still have some problem with access to facilities, although this had been raised and was being negotiated at a high level. He explained that in the past, and still in some cases, it could use mobile operators’ towers and install the radio transmitters there. There was now far better access being granted to access those facilities. SABC had planned where the facilities should be rolled out. Sentech was trying to engage more proactively with the SABC on this point. He pointed out that there had been a delay at a point, due to the decision to wait for the T2 upgrades rather than proceed on the old standards.

The Chairperson asked about job creation, saying that there were rumours that skills were being sourced from India.

Mr Naidoo said that South Africans were in fact equally adept for the task at hand, and there were no riggers being sourced from India.

Mr Kekana made the comment that at the coal-generated power station in Limpopo, there had been unhappiness expressed by local people about the importation of foreign boiler-makers who received work in preference to the local employees.

The Chairperson asked how far the national broadband wireless network had been rolled out in the field. The same questions were asked of DOC on the previous day. He reminded Sentech that he wanted to know about the actual points, not the strategies.

Mr Mohapi said that on the previous day there had been questions posed to the DOC about the release of its broadband plan. Sentech had made submissions to the DOC, who had in turn submitted to National Treasury. Sentech had requested the rollover of R500 million to be used for Dinaledi schools and as part of this programme. National Treasury, whilst not posing any criticisms against the plans, had said that it would not approve the rollover of funding until it had seen the consolidated rollout plan from the DOC. He assure the Committee that Sentech was not simply sitting back and doing nothing. The school rollout was intended to connect schools, which was essentially the connection of a community. The VSAT terminals could be inserted and the same terminals could then be moved, in time, to sites where broadband was not in place. Sentech had written to all Premiers in all provinces, asking for an opportunity to communicate these plans. In the Free State, consent was given and there was an agreement, and commencement of the plan, to roll out VSAT at the schools. In KZN, although the national broadband coverage would be introduced later, there was the intention to connect all schools now. Interactions were done with provincial departments. However, Sentech could move only at the speed at which the Provinces gave consent. It was not waiting for the consolidated broadband plans before it would connect, and had targets for connection of schools.

Ms Tsebe enquired how far Sentech had gone with the Mpumalanga schools project, and how many schools had benefited.

Mr Mohapi said that this initiative did not involve a direct relationship between Sentech and provincial government, as there was a third party who had not delivered. Although the VSAT terminals were put in the schools, there was no approval given for connection. Sentech had made several efforts to try to establish a relationship with this provincial government.

The Chairperson asked if Sentech was involved in the development plan of DOC. He commented that DOC did not seem to have a sense of what it was speaking about, which was why he had asked DOC officials to be present at this meeting. He commented that he was very concerned about the social losses that resulted from delays in the rollout to schools.

Mr Mohapi said that Sentech would respond to questions whenever it was asked to do so, by DOC, but the plan was driven by DOC, and not Sentech. In November 2010, Sentech had made proposals to align with the DOC’s strategic plan, and had developed its own corporate plan along those lines. This plan was then presented to DOC on 25 March. Sentech was willing, and he believed also able, to do more.

The Chairperson thought that there was an issue of lack of capacity in the DOC, and quipped that perhaps Sentech should do the plan for DOC. He asked if the Chairperson to discuss this with the Minister. The whole purpose of integrated planning was that all entities should be running projects in conjunction with each other. However, it seemed that there was not enough done to follow up, and he urged the DOC to ensure that there was greater movement on this point.

Mr Naidoo said that he had discussed the Consolidated National Broadband Plan with the Minister on the previous day. There were impediments being put in the way of Sentech’s ability to achieve its corporate strategy and there was a meeting scheduled for the following week, as there was recognition that this was a matter needing urgent resolution.

The Chairperson thanked Sentech for its presentation. He said that Sentech still needed to look into questions around its salary levels, although this was not part of the Annual Report for 2010/11. The Committee wanted to get a report-back. He also asked Sentech to address issues around staff relations in KwaZulu Natal.

Mr Mohapi said that there was already a commitment to address the salaries. Sentech operated an anonymous hotline, where any staff could report anything, including any alleged abuse by managers, and he would follow up on this.

The meeting was adjourned.



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