In a statement sent out to selected media today, Sentech defended its position after being criticized by Government in February. <\/p>\n
The National Treasury slashed Sentech’s budget allocation, with a Government official being quoted by ITWeb as saying that “the budget slash is there to raise alarm bells in the organisation about its management. At this stage, we do not have the confidence that large sums of taxpayer money would be appropriately used,” he says.<\/p>\n
The National Treasury further announced that Sentech will be phasing out its MyWireless, Biznet and international telephony businesses over the medium term.<\/p>\n
Sentech said that this was not anticipated: “This announcement came as a surprise to stakeholders, in particular, customers and staff and has caused some consternation.”<\/p>\n
Sentech said that at a strategic planning session held in December 2007 it was agreed to migrate MyWireless and BizNet from the retail to a wholesale market, strengthen the Carrier of Carriers and V-Sat offerings to ensure profitability and further review product opportunities and tariffs in the digital environment.<\/p>\n
Sentech further pointed to a lack of funding as a restraining factor. “For the broadband roll-out, Sentech’s original budget request was for R3.1 billion. A Treasury allocation of R500 million has been provided in the current year but there is as yet no firm commitment to provide the balance,” said Sentech.<\/p>\n
“While Treasury has encouraged Sentech to seek alternative funding, the constraints of the PFMA remain in place.”<\/p>\n
“While the commitments to date of National Treasury are encouraging, it can also be seen that a persistent lack of funding over the past five years has resulted in Sentech being unable to maintain and expand the broadcast network and to optimally operate the two licences,” the company said in the official statement.<\/p>\n
Broadband offerings not performing well<\/strong><\/p>\n Sentech’s MyWireless and Biznet services have not enjoyed much support in the market. While other broadband offerings have seen massive growth over the last few years, Sentech’s MyWireless’ subscriber numbers have declined to only a few thousand despite the current broadband boom.<\/p>\n Sentech said that their MyWireless product “was initially very successful but Sentech’s effort to secure State funding to roll out the necessary infrastructure were rebuffed. Over time, MyWireless has lost ground to well-funded and aggressive competitors such as Vodacom, Telkom and MTN.”<\/p>\n This is however only half the story as Sentech lost a large portion of their subscribers due to poor service delivery and a subsequent backlash from consumers. <\/p>\n While additional funding may have helped the company to expand network coverage and engage in more aggressive marketing, Sentech did previously admit that service quality degradation and a poor handling of the situation cost the company dearly.<\/p>\n Government has now instructed Sentech to withdraw from the retail component of this market and become a wholesaler. <\/p>\n “Sentech is to construct and make wireless broadband infrastructure available on open access principles on behalf of the State, with the primary objective of bridging the digital divide and enabling development in the ICT sector and reducing the cost of communications,” said the paratsatal.<\/p>\n Wasting spectrum<\/strong><\/p>\n The company has also been accused of ‘sitting’ on a large amount of valuable WiMax spectrum. While other companies like MWEB, Internet Solutions and Altech are begging ICASA for spectrum to roll out broadband services, Sentech has not been using this spectrum and inadvertently holding the local broadband market back.<\/p>\n Some companies have also complained that it is virtually impossible to work with Sentech to roll out services on their behalf thereby making use of this spectrum.<\/p>\n Loss of staff<\/strong><\/p>\n A final nail in the coffin is the dramatic exodus of skilled staff at Sentech. A large number of their senior and technical staff over the last few years have left with many saying it is due to what they call ‘poor management’.<\/p>\n Sentech conceded that the uncertainty regarding the strategic focus and financial security of the company over the past five years has resulted in an understandable reduction of confidence among Sentech staff. <\/p>\n “From 1 March 2007 to 27 Feb 2008, Sentech had 83 resignations, five retrenchments, 14 retirements, three deceased and two dismissals. In the same period, 101 new appointments have been made and most of the vacant positions have been filled,” Sentech said.<\/p>\n One ex-employee, who asked to remain anonymous, said that the lack of direction from management and bureaucracy within the company meant that very few of the more innovative ideas ever came to fruition.<\/p>\n Another ex-employee who spoke to MyBroadband in confidence said that he doubts whether Sentech has the necessary skills left to build and maintain a broadband network. Sentech has been bleeding technical staff to other telecoms providers, leaving the company with mostly inexperienced substitutes.<\/p>\n To acquire the lost skills will also not be easy despite Sentech CEO Sebiletso Mokone-Matabane’s promise to lift salaries as a means of luring technical staff back to the wireless provider.<\/p>\n “Given the liberalisation of the ICT sector that has resulted in new entrants in the market and fierce competition for skills, skills retention remains a key challenge for the board and management,” the company said.<\/p>\n