Sentech Amendment Bill: briefing

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Communications and Digital Technologies

19 October 1999
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Meeting report

COMMUNICATIONS PORTFOLIO COMMITTEE
19 October 1999
SENTECH AMENDMENT BILL [B52-99]: BRIEFING

 

Documents handed out

Sentech Amendment Bill [B52-99]
Revised Committee Programme (attached to end of the minutes)

SUMMARY
The Sentech Amendment Bill provides for the possibility to transfer the shares of the State (currently the sole shareholder) in Sentech Limited in order to introduce a strategic equity partner and for the use of the proceeds of any such transfer.

The committee agreed to extend this parliamentary session and meet during the last two weeks of November with regard to hearings on the Bill for the SATRA/IBA merger.

MINUTES
SATRA/IBA merger
The Chairperson noted that if the tabling of enabling legislation for the SATRA/IBA merger takes place next week, then the committee can call for public hearings. There are two options: either the committee could work until the end of November or it could meet at the end of January, two weeks before Parliament starts. It is important to pass this Bill before the end of the current financial year, to allow provision for budgeting. Ms Vos (IFP) suggested that they consult the chief whips on the issue of working during constituency week.

The committee agreed to meet during the last two weeks of November with regard to hearings on the bill for the SATRA/IBA merger.

SABC nominations
The Chairperson said that seven nominations had arrived later than the due date. Some of them were postmarked before the due date. Due to the long fax queue, certain faxes only arrived after the due date. He asked the committee whether these late nominations should be accepted. The committee agreed that if there is proof that these nominations were posted or faxed before the due date, then they should be accepted.

Sentech Amendment Bill
Mr A Ngcaba (Director General) briefed the committee on the Sentech Amendment Bill. He said that this amendment would allow Sentech to be privatised, which would be in line with the government's privatisation programme. The new proposed Section 6 (1A) and (1B) provides for the possibility to transfer the State's shares in Sentech Limited in order to introduce a strategic equity partner and for the use of the proceeds of this transfer of shares.

This Bill addresses issues of corporate governance by creating a board of directors which consists of the Chief Executive Officer, Chief Operations Officer, Chief Financial Officer and at least four non-executive directors. The Minister must appoint a non-executive director as chairperson of the board of directors.

Mr Ngcaba requested the committee to allow this Bill to be implemented so that they can move faster towards privatisation. Dr S Mokone-Matabane (Group Executive: Sentech) agreed with the principle of privatising Sentech.

Questions by committee members
Ms Vos (IFP) asked what Sentech is valued at and how soon do they intend bringing an equity partner on board.

Mr A Ngcaba said that firstly the financial advisors would evaluate the company. The value of the company will depend on its profitability, license conditions and the memorandum of association of the company. All this information will be circulated to prospective companies. These companies will then respond with a letter of interest, followed up with a proposal. Their proposal will contain the following information: business plan of the company; how many shares are to be sold; how shares are to be sold and for what the proceeds of the shares will be used. These companies will be short-listed through a series of evaluations. Sentech will then analyse which of the prospective equity partners will best be able to contribute in terms of knowledge and skills. An agreement will then be entered into in order to effect the transfer of shares. This process could take from three to twelve months.

Mr Kekana (Chairperson): A number of radio stations rely on Sentech for the distribution of signals. How will this affect the relations between the public broadcaster, community radio stations and the signal distributor who will now have a commercial interest?

Mr Ngcaba said that the new shareholder will be a minority shareholder and therefore all of Sentech's obligations will have to be disclosed beforehand. These obligations must be clearly set out. When Sentech is privatised, we intend making Sentech a fully digitalised infrastructure.

Mr Morkel (NNP) asked if there is any way that a common carrier creates exclusivity in the market.
Mr Ngcaba said that they do not have a monopoly in signal distribution as the size of the market is small. If you liberalise the market and deregulate, the further distribution of the market will not be possible because the size of the market is too small. Only when the infrastructure is fully digitalised and we are able to have more than 40 channels, can we think of a competitive environment. We first need to develop our service side and let it grow, then we can look into this.

Ms Vos (IFP): How are we going to build our community with all these obligations on the strategic equity partner who has a commercial interest? The cost must not be prohibitive as we need to encourage community broadcasting.
Mr A Ngcaba acknowledged that this must be addressed in the process.

Other points
Mr Kekana noted that their discussions must reflect the convergence of technology. The convergence development was welcomed. There will be one regulator for the industry to ensure harmonisation of the systems of information. Time needs to be allocated early next year to the e-commerce debate.

Mr Ngcaba asked the chairperson to conduct hearings around Internet culture, and to create space on the agenda as this was a matter that needs urgent attention. There are lots of "hate" type websites being created on the Internet stemming from this country.

Appendix 1:
PORTFOLIO COMMITTEE ON COMMUNICATIONS
REVISED PROGRAMME

Thursday, 07.10.99 Closing date: SABC board nominations

Tuesday, 19.10.99 Sentech Amendment Bill: Briefing

Wednesday, 20.10.99 Shortlisting for SABC Board appointments

Friday, 22.10.99 Satra Deliberations (Closed Meeting)

Monday, 25.10.99 Satra Deliberations (Closed Meeting)

Tuesday, 26.10.99 Public Hearings-Sentech A/B

Wednesday, 27.10.99 Public Hearings-Sentech A/B

Thursday, 28.10.99 Tabling Satra Report in NA

Friday, 29.10.99 Formal stages -Sentech A/B


MONDAY 01.11.99 - FRIDAY. 05.11.99 - CONSTITUENCY WEEK

Monday, 08.11.99 Interviews - SABC Board (whole day)

Tuesday, 09.11.99 Interviews - SABC Board (whole day)

Wednesday, 10.11.99 Interviews - SABC Board

Thursday, 11.11.99 Debate in NA- Sentech A/B

Friday, 12.11.99 Interviews - SABC Board

Monday, 15.11.99 Interviews - SABC Board

Tuesday, 16.11.99 Interviews - SABC Board

Wednesday, 17.11.99 Finalise SABC Board appointments

Thursday, 18.11.99 Tabling of SABC Board in NA

 


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