Sentech 2008/09 Strategy and Budget

Meeting report

Sentech presentation
Dr Sebeletso Mokone-Matabane (Sentech Chief Executive Officer) presented on Sentech’s Business Strategy and Budget for 2008/09. Looking at Broadcasting Signal Distribution, funding shortfalls by government were the chief challenge as well as the exchange rate. She explained that phase 1 and phase 2 of the migration to Digital Terrestrial Television (DTT) had been successfully completed. However, phase 3 which commenced 1 April 2008 had a funding allocation of only R150 million out of the R262, 7 million required. The planned DTT roll-out giving 56% population coverage by 31 March 2009 would not be achieved due to the reduced funding allocation. Only 18 sites (40%) as opposed to 36 (56%) would be live. The exchange rate and funding shortfall had implications for dual illumination as well, when analogue and digital signals would co-exist. The government policy regarding the technical specifications for the set-top box required for network design had not been finalised yet so this was also identified as a challenge.

Dr Mokone-Matabane said that Sentech would meet their 2010 World Cup obligations. Funding of R300 million had been allocated. This funding would be used to acquire land at NASREC to build a second teleport and commence construction.

Addressing telecommunications / broadband projects, Sentech reported on its carrier of carriers and VSAT plans and performance. No final decision had been reached between the Department and Treasury about the business plan and funding model for the National Wholesale Broadband Network (NWBN) project. Again only R500 million of a R3,1 billion funding requirement had been allocated by government. The Dinaledi Schools Project, providing wireless connectivity for 233 Dinaledi schools, was not sustainable as a standalone project. It required R2,8 billion. Sentech had proposed that this project should be implemented as part of NWBN. Discussions were still in progress. 

Sentech’s 2008/09 budget for DDT capital expenditure and operating expenditure (dual illumination), 2010 FIFA World Cup, and Broadband was presented. Also shown was the discrepancy between funding requested and funding allocated for 2007 through to 2012. The overall amount outstanding was R3,8 billion.

Discussion
Mr Khumalo (ANC) asked what Sentech was doing for the 2010 FIFA World Cup, and why their equipment was too expensive so that small community radio stations could not afford acquiring such equipment.

Mr Pieterse (ANC) stated that the problem that Sentech was facing was due to the structuring of funding. If sufficient funding were allocated only at a later stage, that was too late as there would already be problems faced by this entity. He strongly suggested that government allocate more funds that would be sufficient so that Sentech could start demonstrating progress to FIFA in the following year.

Mr Dingane Dube (Executive: Regulatory and Government Affairs) replied to Mr Khumalo’s question, saying that in broad terms, assets had been fully depreciated and that the equipment needed to be constantly maintained and such maintenance required a lot of money. He explained that Sentech’s mandate to FIFA was to provide satellite distribution on a worldwide basis.

Dr Len Konar (Non-executive Director) commented that Mr Pieterse was correct in saying that the National Treasury needed to reach a consensus with Sentech about the allocation of funds.

The CEO stated that Sentech was not overcharging its clients. Prices they incurred as a company included illumination costs, electricity, and staff costs were also going up. She mentioned that the company did not own some of its transmission sites and rental for those sites was high. In some instances, Sentech had to spend a lot of money repairing roads where their transmission sites were located. Another challenge that they faced was the electricity crisis that required the company to purchase stand-by diesel generators. She elaborated that Sentech was not intending to focus solely on the Gauteng province but that a lot of work was done there because the province was densely populated meaning that demands were higher there. She stated that FIFA required a double redundancy fiber optic feed and satellite feed which was very important. She then explained that community radios and broadcasters where being charged equitably and equally, and that the Department of Communication had subsidised some of the community radios to assist them with their needs.

Mr Kholwane (ANC) asked how far Sentech had gone in the issuing of licences in terms of configuration and to what extent was the rollout of set-top boxes affected by the issuing of licences.

The CEO replied that it was ICASA who issued the licences and not Sentech. She elaborated that ICASA determined what network coverage its broadcasters receive. Sentech complied with ICASA, and Sentech could only advise the broadcasters as to the availability of spectrum. In terms of the set-top boxes, DTT needed technical specifications to feed the set-top boxes. She noted that the manufacturing of these boxes was not in the hands of Sentech

Mr Kholwane asked if there was a need for a re-configuration of the issues regarding frequency in order for Sentech to be granted channels.

The CEO replied that NFP, the infrastructure company, needed to extend its base by re-allocating certain broadcasting coverage in specific areas. Mr Dube added that frequencies were assigned to the respective broadcasters and not to Sentech.

Ms Smuts (DA) stated that it was evident that Sentech had reached a stalemate with regard to wireless broadband which was due to insufficient funds. Sentech’s decision for delaying the process for implementing set-top boxes was wise and sensible. She said that it was not sensible for Sentech to be expected to finance the Dinaledi Schools project when its budget was already insufficient. She advised them that the Department of Education should be invited to intervene in the Dinaledi Schools project, as the matter could not be solely isolated to the Department of Communications (DoC).

Mr Pieterse said that the DoC was not sufficiently accommodating of Sentech and that technology played a significant role in the schools. He agreed that the MECs in the provinces needed to be invited to play a role in the implementation of the Dinaledi Schools project.

The members agreed that the Department of Education needed to be invited for this matter.

This meeting was adjourned.