Sentech needs more money

Writing in the company's annual report, chairperson Colin Hickling points out that it has been proved impossible to roll out a national broadband radio network until extra funds are received from the government.

The annual report tabled in Parliament on Monday also points out that lack of funds, or even the approval to borrow in the financial markets is preventing the company from upgrading or expanding its telecommunications networks.

"The lack of adequate funding is a major factor to enable the company to control or mitigate its other key strategic risks," the report says.

"It plays a major role in the quality of services offered to its customers. The company cannot timeously take advantage of business opportunities within and outside South Africa."

No back-ups

Although the company has now been given the go-ahead to build a back up teleport facility for the 2010 World Cup, Sentech has no other back-up or redundant facility for its networks.

"The company has been unable to build or provide for back up facilities due to lack of funding," the report says. "A number of options had been identified to provide back up facilities.

"However none of the options have been successfully implemented."

Hickling does point out that the company has made strides in turning the business around. The company's losses have reduced to R21.5m compared to R76.4m a year ago.

The cash flow improved five-fold thanks to a R95m grant from the government for digital terrestrial television. A cost cutting drive and improved process to collect long outstanding debts have also helped.

No more borrowing

Nevertheless the company's debt-equity ratio is only 0.8%, which makes it impossible to borrow more than it already has - until it can get another capital injection from the government.

Financial problems also crop up when the company tries top deals with laws regulations and policy. Restrictions and long delays imposed by the Public Finance Management Act affect the company's ability to take advantage of market opportunities in good time.

"The company's telecommunications network might not be ready in time to meet the legal intercept regulatory requirements, due to lack of funding," the report says.

One of the main problems outlined by Sentech is to be tackled by a special appropriation of money to contribute to the capital requirements of establishing a broadband radio network.

The Special Adjustments Appropriation bill was introduced in the National Assembly on Tuesday by finance minister Trevor Manuel. The bill will be passed by the house on Wednesday.

It gives R500m to the department of communications to transfer to Sentech.

Other state owned enterprises also benefit from the bill, by being allocated cash for urgent needs. They include R44.7m for Alexkor, R222m for Denel and R1.8bn for the Pebble Bed Modular Reactor.

- I-Net Bridge