Sentech has decided not to roll out the National Wireless Backbone Network (NWBN) to connect Dinaledi schools until it is certain of the full funding it needs, the national signal distributor told Parliament yesterday.
Speaking during the presentation of its annual report to the Parliamentary Portfolio Committee on Communications, Sentech's non-executive chairman, Colin Hickling, said: “We, as a board, have learnt several harsh lessons over the past years. And this includes not taking speeches and promises as policy until funding is secured.”
Dinaledi schools are those specifically identified by the Department of Education to teach mathematics and science. They are supposed to be connected to a national wireless network by Sentech, connecting them to the Internet and other academic institutions.
Some 500 of these schools have been selected and Sentech says that, to connect all of them, it would cost R3.1 billion. Last year, National Treasury released R500 million for the project.
Hickling said Sentech's board had decided to ring-fence the R500 million until the final amount could be secured.
Sentech CEO Sebiletso Mokone-Matabane said Sentech acknowledged the importance of connecting the schools, but added it is hesitant to embark on a project for which final funding had not been secured.
CFO Mohammed Cassim said a lesson from Sentech's aborted attempt to enter the retail wireless broadband market, with its MyWireless service, had meant the organisation had not received sufficient funding from government. It had depleted its reserves to the extent that Sentech had to be recapitalised, he noted.
“Currently, we are very dependent on the shareholder [government] for project funding, but the entire company needs to be recapitalised,” he said.
Digital stretch
digital format, is also in danger of being dragged out beyond the 1 November 2011 cut-off date, said COO Beverly Ngwenya. This would result in costs to broadcasters if further funding is not secured timely, she explained.
She said the shortfall in funding of about R249 million meant an extra two phases to the conversion process had to be added. This shortfall could increase to R588 million if the dual-illumination period stretches out to 2013, noted Ngwenya.
At the start of the hearing, Hickling traced Sentech's recent history and said the company had proposed at least three different funding models to the Department of Communications, but all had been rejected.
He said the NWBN project, an advanced plan to enter into a public-private partnership in 2003, was rejected by government, because of the strategic nature of the company. In 2004, Sentech proposed a build, operate and transfer model to government. This plan was rejected in 2006.
“Following a comprehensive due diligence, the renowned German management and technology consultancy, Detecon, concluded in 2005 that the Sentech business model and strategy was 'bankable'. On this basis, loan funding of R1.2 billion was secured from a commercial bank (without a shareholder guarantee) and the Development Bank of SA. After lengthy consideration, government rejected the proposal.”
Hickling added that Sentech remains dependent on state funding for its capital expansion programmes. Its ability to raise loan finance is strictly limited by Sentech's status as a Schedule 3 (b) entity in terms of the Public Finance Management Act (PFMA), he noted.
“Converting this to Schedule 2 status would allow us the freedom to pursue funding opportunities such as those outlined above. The company has been in negotiation with the department and National Treasury since 2005 for a PFMA re-rating.”
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