Urgent turnaround needed for Sentech

Communications minister Siphiwe Nyanda has declared he is highly satisfied with the findings of the anticipated task team report on Sentech.

Speaking at a media briefing, in Pretoria, this afternoon, Nyanda said the report is long overdue and would introduce the long-awaited turnaround strategy for the signal distributor.

The task team comprised of Themba Langa (chairperson), Julia Hope, Mike Makhura, Mochele Noge, Quaraysh Patel, Thandi Ramathesele, Jonathan Cawood, Jason Minnaar and two officials from National Treasury.

The task team report says “the definition of Sentech's role lies at the heart of its problems, along with the strategies it has pursued and its failure to break into the telecommunications market”.

The report concludes Sentech is in a “weak” and financially thorny position, while leaving the CEO's fate hanging.

Sentech's mandate most recently came under attack following its involvement in an undersea cable project.

Opposition party, the Democratic Alliance, lambasted government for allowing two separate state-owned businesses to invest in two different undersea cable projects. The Department of Communications (DOC) defended Sentech, saying it sees little wrong with the additional investment made by Sentech.

Sentech has been in financial dire straits for several years, battling to source funding for some of its major projects, which include SA's digital migration and the company's role as a backup service to Telkom for the Fifa 2010 Soccer World Cup.

The department has been sympathetic to Sentech's troubles, admitting it battled to receive the money it needed to function properly. It also previously said the state-owned enterprise cannot bear all the blame for its poor performance over the years.

The solutions had been criticised for failing to compete and were marred by poor service delivery. They were also criticised for distracting Sentech from delivering on its mandate.

Last year, Nyanda appointed a team of industry experts and labour representatives to investigate Sentech's operations. The team was tasked with undertaking a full business review of its business, and advise the minister on possible interventions required to sustain Sentech's business, based on its mandate and government's expectations.

The report was supposed to have been completed by the end of November 2009.

This afternoon, Langa said Sentech had failed to adequately prioritise its telecommunications business and move into the changing business environment.

“The business of Sentech as it stands today is very weak...It is supposed to play a major role in providing wireless broadband and cannot afford not to have a strategy and coherence,” he noted.

Langa criticised the company's financial performance, saying it had failed by investing in poor business but added that it was mostly due to conflicting messages from the DOC and National Treasury.

The task team blamed Sentech's degeneration into its loss-making situation on its attempt to introduce telecoms services without adequate funding, robust business plans and well thought-out strategies.

“The task team emphasises that Sentech is in a financially thorny position because of the unprofitable products in its telecommunications suite.”

Speaking on the future of CEO, Sebiletso Mokone-Matabane, the minister said “no explicit recommendations on the dismissal of the CEO” had been made.

Nyanda noted the CEO's term ends in September and a decision on the position is due.

The task team report also focused away from the role of the CEO, choosing only to make recommendations on the company's licensing and service issues.

There has been much speculation in the local media that Mokone-Matabane and the entire Sentech board were on the brink of being fired.

The report recommended Sentech exploit under-utilised licences through private-public partnerships. It also said clarity was needed on Sentech's funding but noted it should discontinue all loss-making products and ventures. A recommendation was also made that the signal distributor should remain responsible for encoding and multiplexing.

Four options for Sentech's future have been put forward by the task team, but Nyanda emphasised that decisions would only be made once he had engaged with Sentech.