Sentech needs funding clarity

Johannesburg, 06 Mar 2007

State-signals provider Sentech, which is negotiating its role in the South African broadband landscape with government, needs to receive clarity on the roll-out of its national wireless network as a matter of urgency, say commentators.

Sentech, which has been mandated with bridging the digital divide in underserviced areas, as well as meeting government's broadband needs, is expected to reveal its budget and strategic plan for the next two years to the Parliamentary Portfolio Committee on Communications on Friday.

However, there is as yet no clarity as to whether the parastatal will receive the R1 billion it says it needs to establish a nationwide wireless broadband network. Neither Sentech nor the Department of Communications were available to discuss the company's funding requirements this morning.

BMI-TechKnowledge senior telecommunications analyst Richard Hurst says it is critical government finalises funding for the wireless broadband network as soon as possible. "There must be pressure to get the wireless network going. You can't delay something like this and expect the company to survive."

He says SA will not accomplish its goal of bridging the digital divide in order to provide e-government services to citizens as quickly as possible, if Sentech's funding continues to be delayed. "The time [to act] is now," he says.

Moving target

The latest update of government's plan of action - released on Monday - indicates government's plans to increase access to ICT infrastructure will be met by rolling out Sentech's wireless broadband network. The timeframe for this is set as December this year.

However, in the update released on 7 February, government said the three-phase roll-out plan for the network was being developed and the funding plan was being completed. The set deadline for these outcomes is this month.

No funding alternatives

Sentech's wireless broadband network depends on receiving funds from national government. Some R3 billion in contingency funding has been allocated for this year and Sentech is expected to share this pot with other government entities such as Infraco. Its exact stake will depend on government being satisfied there is no overlap between it and broadband newcomer Infraco.

However, communications department director-general Lyndall Shope-Mafole previously stated the challenge in finalising the network funding lies in the potential for unfair competition, as a result of Sentech providing services to individuals in metro areas and competing privately.

MyADSL founder Rudolph Muller says government's concerns are moot. "Why is government concerned all of a sudden about Sentech having unfair competition over other providers?" He adds government already previously supported Telkom to gain an advantage in the industry.

Muller notes Sentech is being disadvantaged by delays in funding. "Sentech does not have the luxury of sourcing funding elsewhere," he says.

Hurst concurs that Sentech does not have many options of accessing funding beyond National Treasury, as it is a state-owned entity. Government should consider the partial privatisation of Sentech as a possible alternative to resolve the issue of Sentech competing unfairly with other broadband providers, he says, a statement with which Muller concurs.