Broadband plans
Nevertheless, there remained hope that with the right management team, a proper business strategy and sufficient funding, the organisation could make a difference to SA’s torpid telecommunications landscape. That, clearly, has not happened.
A Business Day report published yesterday painted a picture of an organisation in deep disarray. More than 100 people resigned last year and six key executives are on their way out. Financial losses are mounting and it has no updated business plan.
All this from an organisation which is supposed to create the core of a national wireless broadband network providing voice and data services. It will also play a key role in the 2010 World Cup, as the games will be broadcast over its network.
So Sentech has a pivotal role to play in this country, a role that government has purposely given it. In 2002, it granted Sentech two new licences: one allowing it to offer multimedia services such as internet and broadband, the other to route international calls for other operators. At the time Sentech said that, without a significant cash injection, it would struggle to capitalise on the licences. Sure enough, it failed to gain a real foothold in the market, allowing cellular operators and Telkom to overtake it.
Nevertheless, four years later Communications Minister Ivy Matsepe-Casaburri announced that Sentech’s wireless broadband infrastructure network would be expanded. This would allow it to carry voice, introducing greater competition and helping to bring down SA’s sky-high broadband costs.
But, once again, government failed to back these plans with funding. Granted, there may be solid reasons the national treasury is reluctant to fund Sentech. It has failed to build a meaningful customer base, has made an operating loss since 2003 and has had a negative return on equity since 2002. Management is not cutting it.
But surely the solution here is for government either to force management to perform or to replace it and demand a proper business plan. The answer is not to continue expanding its responsibilities without allocating the necessary funding or putting a management team in place which can deliver. That is Matsepe-Casaburri’s responsibility and she has failed in her duty.
Instead, it now seems that Public Enterprises Minister Alec Erwin is developing a dual strategy of his own to deliver broadband. Last October government did a major about-turn and announced that, rather than selling the transmission assets of Eskom and Transnet to the second phone operator Neotel, the state would retain them in a new company called Infraco.
Infraco would also get a capital injection of R627m. The aim of the company? To lower the cost of broadband by supplying long-distance and international networks — uncomfortably close to Sentech’s mandate.
We would be the last to complain about greater competition in the telecoms market, but there has to be some clarity on government’s strategy. Is the state setting up two broadband companies? If so, that’s a major step back from government’s stated intention of liberalising the telecoms market. An explanation is long overdue.
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