Tuesday, June 16, 2009

SABC is risk for Sentech

Sentech has identified the South African Broadcasting Corporation (SABC) as a potential business risk, although the public broadcaster has being paying its bills to the national signal distributor on time, says Sentech CEO Sebiletso Mokone-Matabane. by Paul Vecchiatto
She made this comment in answer to questions by the Parliamentary Portfolio Committee on Communications late last week, following the presentation of Sentech's budget plan for the current financial year.

The SABC is Sentech's largest customer and the signal distributor was originally part of the corporation.

Recently, the SABC has been hit by the news that it needs a R2 billion cash injection from government and has failed to pay some of its bills, particularly to satellite TV broadcaster MultiChoice and media production houses. This crisis manifested itself further in a raft of board resignations from the SABC during the past week.

“So far, the SABC has been paying its bills on time, but we have to identify it as a business risk in light of what has been happening there,” Mokone-Matabane noted.

She said one of the options could be to turn off the transmission signal if the SABC defaults on its payments. “But we would not take that decision on our own. We would only take it in consultation with the rest of government.”

During the Sentech presentation, it highlighted there was still a funding shortfall of R558 million for the transmission of digital and analogue TV signals during the so-called dual illumination period. This is when the country migrates to digital terrestrial TV (DTTV) with the analogue signal due to be switched off in November 2011. So far, the state has provided R330 million to cover the costs of transmitting both signals.

Dual costs

During the dual illumination period, Sentech's operating costs are expected to rise from R994.463 million in the current financial year, to R1 billion in 2010. However, revenue streams are expected to decline in 2010 from R944.548 million to R914.487 million, leaving losses of R59.157 million and R52.353 million in 2009 and 2010, respectively.

Capital expenditure for the roll-out of DTTV is expected to be R960 million by 2013, when 92% of the population should be covered. However, the shortfall from government's funding allocation so far means R115 million has not been allocated yet.

Dual illumination began on 30 October last year and Sentech is operating a pilot for the SABC and privately-owned e.tv. So far, Sentech has achieved 33% population coverage at 31 March. This is because the Department of Communications and regulator ICASA have delayed the finalisation of the DTTV spectrum plan and policy, and so the target of 48% could not be met.

Sentech's role in the Confederations Cup and the 2010 Soccer World Cup is to provide satellite infrastructure as part of government's guarantees. The signal distributor was allocated R300 million in the 2008 communications budget speech, of which R200 million has been paid over. The remaining R100 million is to cover operational and bandwidth costs.

Government has only paid Sentech R500 million of the required R4.4 billion to roll out a national broadband wireless network. This network is to be built with the aims of meeting the country's millennium development goals and to lower the costs of connectivity.

Sentech CFO Siddique Cassim said the National Treasury is of the view that the balance of the money is raised from the financial markets, but this will have a negative impact on meeting those challenges.


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