Parliament's Communications Committee yesterday approved the R160 million Sentech needs to continue rolling out its digital TV transmitters, but stopped short of approving its entire business plan.
The national signal distributor was the last entity within the Department of Communications' portfolio of organisations to present its 2010/11 budget and forecast medium-term expenditure to the legislature.
The hearing was interrupted for a short break as the executive Sentech team members did not appear to understand the questions being asked of them and then had to find the right information.
“What we need to know, as the oversight committee, is what exactly are you going to do with the R160 million that you are asking us to appropriate for you? We need a breakdown of how you are going to spend it. We also need to know exactly what this R46 million deficit is you have indicated, because we cannot approve a budgeted deficit,” said communications committee chairman Ismail Vadi.
Sentech COO Beverly Ngwenya apologised for not showing the complete breakdown of the R160 million, but did display a chart showing the actual expenditure and the items it would be used for.
“I am very happy with that, but what assurances do we have from you that Sentech will complete the programme of rolling out digital TV coverage to 56% of the population, by 31 March next year?” Johnny de Lange (ANC) asked.
Ngwenya's reply was that the digital TV migration roll-out was well under way and was adequately funded.
Sentech CFO Siddique Cassim explained that Sentech's R46 million loss was not a cash loss and so no extra funds were needed from National Treasury. “Because of IFRS [International Financial Reporting Standards], rules are based on an accrual system, and the fact that we are phasing out the analogue system means we have a R132 million depreciation,” he said.
During its strategy presentation, Sentech alluded to the fact that it was considering re-entering the telecommunications sector, that there were increased opportunities in the digital terrestrial TV system, and that its capital structure needed to be strengthened. However, it pointed out there were regulatory and policy risks that needed to be dealt with.
“This company has serious problems,” Independent Democrats leader Patricia de Lille said. “The minister [Siphiwe Nyanda] said in reply to a parliamentary question from me that the task team report cost R9.8 million. I want to know if Sentech has used the recommendations.”
Eric Kholwane (ANC) proposed the Sentech funds be approved for the time being, but that the company comes back to Parliament to explain itself further.
Vadi said Sentech's new board would take over shortly and that, once it has settled down, it would present to Parliament in either April or May.
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