State-owned Sentech is becoming a predictable and expensive soap opera. But despite the same story for years \u2014 red ink splashed across its income statement \u2014 its supporters in Pretoria remain as loyal as ever.<\/p>\n
Since 2003, Sebiletso Mokone- Matabane\u2019s Sentech has lost R215m. For the year ended March 2007, revenues rose to R729m but the company once again reported a loss, albeit reduced, of R21,5m. The end of the haemorrhaging is not in sight, according to Sentech\u2019s earnings forecasts. The broadcasting signal distributor and wannabe telecommunications operator expects next year\u2019s post-tax losses to be R16,3m.<\/p>\n
The company also owes a cumulative R145m to the regulatory Independent Communications Authority of SA (Icasa), the Development Bank of Southern Africa and the state-owned SABC (Sentech\u2019s partner in the abandoned bid for a pay-TV licence).<\/p>\n
The losing streak doesn\u2019t appear to faze government, Sentech\u2019s sole shareholder. Despite the ongoing losses, communications department director general Lyndall Shope-Mafole says Sentech is well-run, self-sustainable and meeting its service delivery mandate. She says government will not sell the company.<\/p>\n
Of course, this is the same shareholder that Sentech chairman Colin Hickling accuses of stymieing the company\u2019s growth. Hickling says government has prevented Sentech from borrowing from the capital markets to fund its expansion and take advantage of opportunities in SA and elsewhere in Africa.<\/p>\n
The lack of funding does not, however, explain Sentech\u2019s poor performance in its telecom business. Its MyWireless broadband service has failed to attract much consumer interest and its revenues have fallen year on year in a booming broadband market.<\/p>\n
Says Shope-Mafole: \u201cSentech is not like MTN or Telkom; it\u2019s not profit driven. Its mandate includes penetrating underserviced communities that may not be commercially viable. So clearly, it\u2019s not competing with the private sector.\u201d<\/p>\n
Sentech will be heartened that its funding woes may soon end. National treasury has earmarked R500m for broadband infrastructure spending by Sentech. But Sentech says the allocation falls short of the R1bn it needs. Also, the R500m grant has not yet been transferred \u2014 national treasury first wants to agree to a detailed business plan.<\/p>\n
Shope-Mafole is confident that once the money is finally transferred, Sentech will do a good job rolling out the wireless network. \u201cI\u2019m confident of that,\u201d she says.<\/p>\n
Her confidence may be misplaced. MyWireless is foundering against more spirited rivals such as Telkom, iBurst, Vodacom and MTN. In the past year, the MyWireless business\u2019s revenue has declined 5%, to R23,6m. It\u2019s not known how many MyWireless subscribers Sentech has on its books, but it is under 10 000.<\/p>\n
Analysts say Mokone-Matabane could save Sentech from further bloodletting by focusing on existing opportunities in broadcasting instead of eyeing ambitious telecom projects. Sentech\u2019s strength remains its terrestrial radio and television broadcast signal distribution business, which contributed nearly 60%, or R414m, of Sentech\u2019s revenue in the 2007 financial year.<\/p>\n