Glimmer of hope for Sentech

Johannesburg, 16 Apr 2007

Government is on track to position Sentech as a key broadband provider in SA, and is adamant the signal provider's project funding woes will soon be over.

This comes after the company last week expressed its frustration at waiting for National Treasury to allocate funding for its wireless broadband network project. It warned it could miss important opportunities in the market if unable to start roll-out soon.

Government has been mulling Sentech's competitive position in the market since the company requested funding for the R1 billion project, which was mandated by government. Communications minister Ivy Matsepe-Casaburri announced the project in May, but it has been a non-starter due to government's procrastination on funding. This recently prompted Sentech to seek permission to source money via non-government avenues.

However, Department of Communications director-general Lyndall Shope-Mafole says the investigation into Sentech's role opposite private sector companies in the commercial space has been completed. It was government's intention, she explains, to satisfy itself that Sentech would not compete with private sector organisations. This would prevent a government-subsidised entity from crowding out private companies in the market, she notes.

Due process

However, Shope-Mafole says government has now completed the investigation and Sentech can expect to receive funding "soon". The probe into the scope of the project has determined Sentech would provide broadband connectivity to underserviced areas, but would keep out of the retail market.

It is now up to National Treasury to allocate the money, but Shope-Mafole says she could not put a specific timeline to this or comment on whether Sentech would receive the entire requested amount. The funding delays, she says, can be blamed on government's need to follow "due process".

"Government is sensitive to Sentech's situation. We also agree the company could miss key opportunities in the market if the project is not allowed to proceed soon."

Shope-Mafole also says government is supportive of Sentech CEO Sebiletso Mokone-Matabane's recent appeal to Parliament for its board to be governed by the Section 2 rules of the Public Finance Management Act (PFMA), rather than the current Section 3(b) rules. This would give Sentech the flexibility to source finance to keep up with its commercial competition.

"We have no problem with that. That is why we took Sentech's appeal to treasury."

She notes this would require the PFMA to be amended, which would entail a complex process.

Meanwhile, Shope-Mafole says the wireless broadband project would see a phased roll-out, with the deployment of new infrastructure and establishment of access to already-existing infrastructure in certain areas. This would provide interconnectivity between various government departments' infrastructure and projects in those areas.

Certain priority areas have also been identified, such as host cities for the 2010 World Cup and their surrounding areas.