Sentech desperate for more cash

By Paul Vecchiatto, ITWeb Cape Town correspondent

Cape Town, 08 Nov 2007

Sentech desperately needs additional funding to meet its digital TV migration roll-out, and to be more flexible to react to market conditions, CEO Sebiletso Mokone-Matabane told Parliament yesterday.

Presenting the national signal distributor's annual report to the Parliamentary Portfolio Committee on Communications, Mokone-Matabane said she sensed the Department of Communications (DOC) was supportive of this. However, the additional funding and allowing Sentech to raise its own finance had to be done in consultation with the National Treasury, she noted.

Sentech has been stating for the past two years before this committee that it needs to be reclassified under the Public Finance Management Act to a Schedule 2 company rather than the 3(b) classification it has now.

As a Schedule 2 company, the board would have greater leeway in raising finance from sources other than government. Broadband Infraco, which is seen as a state-owned competitor to Sentech, has the higher classification.

In reply to a question by Democratic Alliance MP Paul Swart on what reception Sentech would receive from the private sector for funding, CFO Mohammed Siddique Cassim said Sentech had tested this and found the private sector to be "very interested".

"Our balance sheet is not investor attractive as the gearing is high and the balance is weak. However, on a project basis, there is a lot of interest. So much so that, in some cases, the private sector has waived government guarantee requirements because they believe in the projects," he said.

Boosting competition

Makone-Matabane said services such as MyWireless had helped spur competition in the broadband market, as it was the first to offer such a service for under R100 per month.

"We have seen increased competition from companies such as Telkom's ADSL, 3G services supplied by the cellular networks and iBurst," she said. "However, with only 56 base stations we do not have adequate coverage."

Makone-Matabane said, depending on what the policy directives regarding Broadband Infraco are, Sentech could cooperate with it as Sentech could provide the last mile access for Infraco's network.

Digital weakness

She pointed out that a major weakness with the DOC's digital terrestrial TV (DTT) migration plan was that it made no provision for a piloting period.

"We originally foresaw a six-month test period before beginning the switch-on on 1 November 2009, as we do not want to be in the same boat that the transport department found itself with the eNatis project," she said.

Another problem with the DTT roll-out is that Sentech had not yet received the frequency allocation so it could inform equipment manufacturers and this could impact the delivery of the equipment, Makone-Matabane said.