Private investors eye Sentech
Struggling state-owned signal distributor Sentech has received interest from private investors as the company cautioned that funding uncertainty could compromise its status as a going concern.
This week Sentech and the communications department accused the treasury of stifling the signal carrier's growth by holding on to cash and not allowing it to raise money from private investors to roll out crucial projects such as digital migration for the 2010 soccer World Cup and broadband network.
Lack of funding has made it difficult for the group to grow its telecoms business despite being one of the first companies to get access to a spectrum that allows it to offer high speed internet services. The company is now forced to change its broadband network strategy from retail to wholesale, a move that might not attract external funders.
The network will link low income areas such as rural areas, schools, hospitals and libraries to fulfil government's strategy of bridging the digital divide and reducing the cost of communications.
While it needs R3.1 billion for the project, it has so far received R500 million.
Yesterday chief executive Sebiletso Mokone-Matabane said Sentech had received interest from banks keen to invest in the company and negotiations were in progress. It wanted to stop relying on taxpayers' money and had asked the treasury to be able to raise money privately.
"We will not fold arms and wait … our licence allows us to offer multimedia services. So we have to be creative and come up with business models that will also help the company [be profitable]," she said.
Sentech acknowledged that it would be a challenge to convince banks to buy into its business plan after recent allegations of poor corporate governance might have tarnished the company's reputation.
It was finalising its broadband network programme and among other things it would consider hiring a service provider to build its network.
Mokone-Matabane said the treasury did not provide concrete reasons why it was withholding funding and why it would not change Sentech's Public Finance Management Act status for it to raise funds from the markets.
"We are competing with [other government projects such as housing] and maybe telecommunications is seen as a luxury," she said.
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