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Analogue switch-off to improve fiscus, bring SABC financial relief

Read time 5min 30sec

Sentech says the national analogue switch-off, also known as the digital migration process, will go a long way in reducing costs for the South African Broadcasting Corporation (SABC).

This comes as the SABC’s financial constraints relating to signal distribution services delivered by Sentech have become public knowledge in recent days.

The state signal distribution entity yesterday briefed Parliament’s Portfolio Committee on Communications on the signal distribution taxonomy.

The SABC is a key customer of Sentech, with the latter providing signal distribution services, including direct-to-home, digital terrestrial transmission, FM, medium wave and analogue TV.

In the briefing, Sentech COO Tebogo Leshope revealed to the committee that the SABC’s average combined monthly costs for signal distribution services are roughly R72 million. Annually, the costs amount to R869 million.

Leshope explained the majority of the country is still reliant on incumbent technologies such as analogue radio and TV, particularly for radio services.

“Once we migrate or conclude analogue switch-off, immediately the SABC will realise 27% in savings on an annual basis,” says Leshope. “It’s a lot of money − about R130 million − that can go back into the SABC. It can be redirected to either content or whichever needy part of the SABC for further sustainability.

“The sooner we get to analogue switch-off, the better it is for the situation that the SABC finds itself in. We are working very closely with the SABC to collaborate and find the soonest methodology to get to that point, as it will give the SABC financial relief.”

Responding to MPs’ questions about switching off the analogue TV signal, Sentech CEO Mlamli Booi said it will give the SABC a significant benefit in terms of cost-effectiveness of signal distribution. “They will save over R120 million when we switch off analogue. The sooner we do this, the better.”

South Africa’s analogue switch-off process has faced numerous challenges over the years, with controversies and department leadership changes bogging down the process even further. Government’s latest target is to have 70% of the migration from analogue to digital terrestrial television completed by March 2021.

Sentech continues to support the dual-illumination broadcast phase while the digital migration is still in progress.

Dual-illumination, or simulcast, is the interim period in which both analogue and digital signals are allowed to be transmitted at the same time before the analogue signal is switched off. At the end of the dual-illumination period, all analogue television broadcasts will cease.

Explaining the cost implications of dual-illumination, Booi said no broadcaster, including the SABC, is paying for dual-illumination.

“This cost is covered by the fiscus. It’s an allocation that is paid for by the fiscus and that is the only allocation we receive from government for covering that cost, until such time that we switch off analogue.

“When we do switch off, it will be a great saving to the fiscus and also a great saving to the SABC. We would like to encourage members to keep us accountable in terms of when this switch-off is going to happen.”

Merger for change?

Leshope told the committee Sentech has achieved eight consecutive clean audits, attributing this to good governance within the organisation.

When asked about the potential impact of the proposed merger with Broadband Infraco (BBI) on Sentech’s financial resources as well as timelines, Booi directed the question to the Department of Communications and Digital Technologies (DCDT).

However, regarding the modelling of the merger, Booi said the team (DCDT, Sentech and BBI) are working on finalising the business case.

Nomvuyiso Batyi, acting director-general in the DCDT, responded that the process has been ongoing.

“We have finalised the business case and it will be submitted to National Treasury and the Department of Public Service and Administration.

“Thereafter, we intend drafting a Bill…our target is that the draft Bill should be sent to Cabinet by the end of June 2021. Once Cabinet approves, then we will follow the legislative processes. We are targeting 2022 to make sure legislatively-wise, we are on track.”

The merger forms part of the DCDT’s plans to reconfigure some of the entities in its portfolio in line with president Cyril Ramaphosa’s mandate to streamline government departments and entities.

The reconfiguration of BBI and Sentech will result in the establishment of a state-owned digital infrastructure company that will incorporate broadband, satellite, cloud and other technologies that talk to infrastructure, as noted by DCDT minister Stella Ndabeni-Abrahams.

Sentech CEO Mlamli Booi.
Sentech CEO Mlamli Booi.

Joined at the hip

On issues that the SABC is looking to reduce signal distribution fees by R500 million, Booi says the target won't be achieved immediately.

However, he does believe it is a journey that Sentech and the SABC can traverse together, to see how close the public broadcaster can get to that target over the years.

The SABC is a very important customer of the signal distributor, noted Booi, adding that Sentech’s business revenue from the SABC is just over 60%, while other entities account for plus/minus 40%.

“If they are aiming to reduce that business by R500 million, is it something that is achievable? We do think it is a process that has to be undergone by the SABC and it will also have to speak to issues of what network or services are they planning to terminate but it is an issue that we are still discussing with the SABC.”

Booi indicated Sentech is committed to support the SABC in delivering on its public mandate, and will continue to engage with it.

“I do want to emphasise that we don’t have the luxury of going to Treasury to ask for bailouts, and therefore, we must make sure we manage our finances responsibly.

“Without a signal distribution, there is no broadcasting. Us [Sentech] and SABC are tied at the hip; we are those twins which you cannot easily separate,” he concludes.

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