SENTECH PRESENTATION

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SENTECH PRESENTATION

• TO THE PORTFOLIO COMMITTEE ON COMMUNICATIONS
• Date 07 March 2008

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AGENDA

• 1. Sentech strategy, timeframes and targets in
  rolling out wireless broadband
• 2. Funding strategy for the general operations of
  Sentech
• 3. PFMA classification of Sentech
• 4. Retention and development of staff

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TEAM MEMBERS

• Chairperson Mr. Colin Hickling
• Chief Executive Officer Dr. Sebiletso
  Mokone-Matabane
• Chief Financial Officer Mr. Siddique Cassim
• Chief Operating Officer Mrs. Beverly Ngwenya
• Executive Regulatory Govt. Mr. Dingane Dube
• Affairs
• Specialist Stakeholder Relations Mr. Monde
  Ndleleni

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Broadband wireless strategy

• 2003 business model combination of retail and
  wholesale, urban and rural. The strategy not
  successful due to funding and high gearing.
• MyADSL rated MyWireless as best product in terms
  of speed and reliability.

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Broadband wireless strategy

• 2005 Business model (BOTT) combination of retail
  and wholesale, urban and rural.
• R1,2billion debt funding secured. Business
  structure not approved.

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Broadband wireless strategy

• 2007 Business Model wholesale, combination of
  urban and rural.
• Rollout to schools, hospitals, clinics, Thusong
  post offices and Government.

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Broadband wireless strategy
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Broadband wireless strategy

• Phase 1 Coverage Area Urban and under serviced
  areas within the urban areas
• Phase 2 Coverage Area Secondary towns
• Phase 3 Places of Interest
• Phase 4 Rural Areas
• Phase 5 Densification

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Broadband wireless strategy
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Broadband wireless strategy
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Broadband wireless strategy

• Total capital requirement is R4.4 billion of
  which the fiscus requested to fund R3.125 billion
• No debt funding
• Wholesale price R100 private sector and R75
  public sector.
• Cash flow positive from year 6
• Supports Sentechs return to profitability within
  6 years

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Consolidated Existing Business and NWBN
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Total Funding Requirements from National Treasury
  2007 2008 2009 2010 2011 2012 Total
Funding R000 R000 R000 R000 R000 R000 R000
Broadband              
- Amount requested - 911,931 665,958 1,077,411 296,927 172,881
- Amount allocated by NT - 500,000     500,000
DTT Capex              
- Amount requested 95,000 120,000 262,700 231,400 250,900   960,000
- Amount allocated by NT 95,000 120,000 150,000 150,000 150,000   665,000
DTT Opex (Dual illumination)              
- Amount requested - - 152,100 224,800 263,800 277,000 917,700
- Amount allocated by NT - - - - - - -
2010 FIFA World Cup              
- Amount requested - - 200,000 100,000 - - 300,000
- Amount allocated by NT - - 200,000 100,000 - - 300,000

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Broadband wireless strategy
Year Funding Requirement Budget Allocation
Year 1 2007/2008 R912million R500million
Year 2 2008/2009 R666million -
Year 3 2009/2010 R1077million -
Year 4 2010/2011 R297million -
Year 5 R173million -
Total R3,125billion R500million
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Broadband wireless strategy

• Rollout of wholesale national broadband wireless
  network catalyst in the market and using ICT for
  development.
• DOC Sentech rollout to Dinaledi Schools and
  hospitals, clinics, Thusong Post offices and
  Government Departments within coverage area (Apex
  of priorities).
• National Treasury allocated and transferred
  R500million, subject to following conditions
  exit retail and focus on wholesale, business plan
  should be sustainable and raise the additional
  funding from the market.

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Broadband wireless strategy

• If Government allocation only R500million, and
  the difference raised from the market
• Sentech roll-out first in lucrative markets to
  service the debt
• The promise of lower connectivity prices will be
  reviewed
• Millennium Development Goals will be achieved at
  a very slow pace, as rural areas will be covered
  later
• The entire business and financial model will
  change

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Broadband wireless strategy

• Way forward
• DoC and National Treasury must agree on
• Policy business model/priority areas
• Funding debt equity ratio to be set by
  Shareholder

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PFMA CLASSIFICATION

• Public Finance Management Act (PFMA) is a very
  good legislative tool for the state to exercise
  proper supervision over State-Owned Enterprises
  (SOEs), of which Sentech is one.
• Sentech is currently classified under PFMA
  Schedule 3B.
• Other entities reporting to the State in this
  category includes, amongst others, Accounting
  Standards Board, Legal Aid Board, and Financial
  Services Board.
• The constraints on the day to day running of an
  SOE impacts on the ability to timeously respond
  to business opportunities .
• In order for Sentech to operate effectively, it
  is imperative that the Sentech Act be amended to
  classify the Company as a Schedule 2 entity under
  the PFMA.

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Staff retention, training development

• Skills shortage
• Retention strategy retention bonuses and
  training, both locally and internationally
• Sentech School of Technology
• Internal staff training
• Learnerships
• Internship programme

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THANK YOU