Tuesday, February 16, 2010

South Africa - Sentech is “rudderless, inadequately funded and misdirected”

[doc] SENTECH The Task Team’s principal finding on Sentech is that the signal distributor is in urgent need of a turnaround strategy. In an extensive 93-page report, the Task Team urges drastic and immediate action if Sentech is to avoid lapsing into terminal decline.

Highlighting the competitive threat, the report indicates that changes in legislation brought about by the Electronic Communications Act, have seen the entry of more than 300 new competitors. Previously Sentech enjoyed a monopoly in the broadcast distribution space. The Task Team also found that the definition of Sentech’s role lies at the heart of its problems along with the strategies it has pursued and its failure to break into the telecommunications market. The migration to less expensive digital channels is an added challenge to Sentech. The Task Team emphasises that Sentech is in a financially thorny position because of the unprofitable products in its telecommunications suite. It is of the view that these products affect the profits made from regulated and unregulated signal distribution. The SABC is the single-most significant revenue-generating client to Sentech as a whole. Sentech derives as much as 75% of its revenue from the SABC. The exposure is such that should the SABC be in a position to self-provide, Sentech’s revenue generation will be adversely affected. The Team maintains that Sentech’s degeneration into its current loss-making situation began with the awarding of telecommunications licences and the organisation’s attempt to launch its telecommunications services without adequate funding, robust business plans and well thought-out strategies.

The Task Team considers that in its current state, Sentech is “rudderless, inadequately funded and misdirected”; that its status quo renders it an unsustainable business.

Sentech is “rudderless, inadequately funded and misdirected”

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