A ministerial task team's damning report on the state of Sentech fails to reveal anything, but raises questions on the direction the state-owned entity will have to take, say analysts.
Yesterday, communications minister Siphiwe Nyanda released the findings of the investigation, but was careful to note that no decisions had been taken. The task team, which was commissioned in June 2009, revealed the signal distributor was in urgent need of a turnaround strategy and called for immediate action.
World Wide Worx MD Arthur Goldstuck notes that “this is a crisis a long time coming” and it has taken the Department of Communications years to finally talk about taking action.
Denis Smit, MD of BMI-TechKnowledge, says the dilemma Nyanda now faces is in terms of what needs to be done next.
While the national broadband strategy is expected to define Sentech's role, there has never been any consensus on the direction the signal distributor should take, he says.
The task team recommended four strategic options on the future of the state-owned entity. More conservatively, the report says Sentech should reposition itself in terms of its core competency as a broadcasting signal distributor.
The report also recommends that Sentech continue with a diversification strategy of growing its telecoms business and transfer its non-broadcasting ECNS and ECS businesses to Infosat.
“The worst thing would be further diversification... the core business will suffer and there is no guarantee that diversification will yield returns. It should be avoided at all costs,” says Goldstuck.
Smit notes that Sentech's “funding dilemma is acute”. The company has long suffered budget constraints for its major projects and recently posted a loss on earnings in its financial reports.
If the decision is made for Sentech to pursue broadband solutions, partnerships with the private sector and funding are key to its success, he explains.
Management changes
While the minister has shied away from taking any decisions on the future of the Sentech board, its CEO and other members of management, the report alludes to the role poor management played in the Sentech crisis.
The task team recommended that “staff and executives with competencies in broadcast signal distribution need to be recruited, developed and retained”.
Sentech is a clear example of government's failure to appoint individuals with clear and demonstrable skills and experience for management positions, says Goldstuck.
He adds that the turnaround of Sentech will only happen if competent management is put in place.
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