State signal distributor Sentech recorded a profit of R97.6 million for the half year, which was nearly R16 million ahead of budget.
Presenting on the entity's financial performance for the half year at a Parliamentary portfolio committee meeting, CFO Protas Phili said the balance sheet shows capital and reserves of R843 million, which indicates the extent to which the entity is solvent.
He added that while revenue of R400 million is 3% below the target of R412 million, operating expenses were R55 million, or 16%, below the R338 million budget.
The under-expenditure was a direct result of a board decision to suspend activities related to supply chain management to ensure it is “beefed up” to comply with best market practices.
Personnel costs were R16 million (11%) below budget owing to vacant posts not being filled, according to the CFO.
Self-sustained entity
Due to this performance, Sentech CEO Setumo Mohapi said the organisation has “turned around” and there is no need for a turnaround strategy.
He explained that a year ago there had been speculation that the entity would run out of money, and industry insiders were starting to talk about establishing an alternative signal distributor.
However, the auditors have now acknowledged that sufficient cash has been generated to sustain the organisation and to expand operations.
Sentech has previously been referred to as government's problem child, as it has been in financial dire straits for several years.
Last February, a task team was appointed to investigate the company's precarious situation, and found it was in a “weak” and financially thorny position. It has also been through a series of top-level ructions that destroyed the board that was installed last April.
Personnel challenges
The CEO also said there have been a number of disciplinary cases involving senior officials, related to fruitless and wasteful expenditure, as well as irregular expenditure.
In several instances, these cases have been taken to the Commission for Conciliation, Mediation and Arbitration, and are being defended by the company. Others resigned before the completion of disciplinary hearings, and criminal charges have been laid with the police.
Mohapi said steps are being taken to recover missing funds.
Members questioned why Sentech is struggling to fill strategic vacancies, in some cases for more than 14 months.
The CEO said vacancies are being filled and the challenge is to find people who not only understand the industry, but who also have a keen sense of public service.
Broadband bottleneck
Reporting on Sentech's three year corporate plan, Mohapi said a key element is the rollout of the National Wireless Broadband Network (NWBN).
The network will offer broadband access to schools, health facilities and government services in under-serviced areas.
The country has around 27 000 basic education schools, of which only about 5 000 are connected to broadband. This means that millions of learners are currently denied access to online educational services.
The CEO said the rollout of the NWBN would lead to increased quality of healthcare in rural areas, while studies had shown a correlation between broadband access and the economic growth rate of local economies.
KwaZulu-Natal has done a considerable amount of preparatory work, through its provincial Department of Economic Development, and has been identified by all stakeholders as the benchmark region for the roll-out.
He added that state-owned enterprises, such as Broadband Infraco and the Universal Service Access Agency of South Africa, have become role players on the basis of the programme being a public service initiative, rather than a profit-driven venture.
The estimated cost of the NWBN plan was R1.49 billion. However, Mohapi said some issues have recently arisen between National Treasury (NT) and the Department of Communications (DOC).
While NT has acknowledged Sentech's new business plan quite positively, it has stated that the money allocated should not be used until the DOC has met certain conditions, a critical one being the submission of a Consolidated National Broadband Plan.
“This bottleneck should be cleared by the end of the year, so that work on the project can proceed.”
Filling gaps
Mohapi also briefed the committee on the Low Power Expansion Project (LPEP).
It is being carried out as a shared mandate with the SA Broadcasting Corporation (SABC) to provide universal access to public broadcasting services.
About 8% of the population is still unable to receive any form of television, and the CEO said there is a different type of challenge when it comes to radio. The challenge here is diversity, trying to provide coverage for all language services, so they can be heard anywhere in the country.
Only SAFM and RSG have this type of coverage, so the LPEP intends to fill the “gaps” in remote areas for both television and radio.
Sentech's target is to set up 100 low power public FM radio and television stations over the next three years, 38 of which have already been rolled out, and it is confident of meeting its target within the allotted time.
Mohapi said the LPEP does not make use of the specialist mast infrastructure, but is able to meet some of its requirements by sharing the existing mast infrastructure of mobile operators.
Vodacom, Telkom and MTN have all made sites available; while local municipalities had suitable facilities, such as water towers or tall buildings, which could be made available.
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