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PRESENTATION TO THE PARLIAMENTARY PORTFOLIO COMMITTEE ON COMMUNICATIONS 25 MARCH 2010 CAPE TOWN. OVERVIEW. 1. Sentech Team 2. Achievements: 2009 Corporate Plan 3. Strategic Plan and Budget: 2010 – 2013 Corporate Plan 4. Project Status: DTT and 2010 FIFA World Cup Soccer 5. HR Strategy
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PRESENTATION TO THE PARLIAMENTARY PORTFOLIO COMMITTEE ON COMMUNICATIONS 25 MARCH 2010 CAPE TOWN
OVERVIEW 1. Sentech Team 2. Achievements: 2009 Corporate Plan 3. Strategic Plan and Budget: 2010 – 2013 Corporate Plan 4. Project Status: DTT and 2010 FIFA World Cup Soccer 5. HR Strategy • Participation in Uhurunet • Conclusion
SENTECH TEAM • Dr. Sebiletso Mokone-Matabane: Chief Executive Officer • Ms. Beverly Ngwenya: Chief Operations Officer • Mr. Mohammed Siddique Cassim: Chief Financial Officer • Mr. Dingane Dube: Executive Legal & Regulatory • Adv. Matlakala Monyai: Company Secretary • Adv. Rachel Ramokhufi: General Manager Office of the CEO • Mr. Monde Ndeleni: Government Relations
LOW POWER TRANSMITTER ROLLOUT Below are sites rolled out and switched on to date: In the Greater Karoo – Western Cape • Prince Albert • Leew Gamka • Nelspoort • Merweville • Klaarstroom In the Kgalagadi area – Northern Cape • Heuningvlei • Severn • Loopeng • Laxey
LOW POWER TRANSMITTER ROLLOUT cont. In the North – Limpopo • Indemark • Mpzema/Phadzima • Mavhunga In the Cape – Western Cape • Agter-Witzenberg – (To be completed end March 2010) • Genadendal In the South - Free State • Villiers • Phillipolis
MANDATE • Electronic Communications Act (No. 36 of 2005) “…to provide electronic communications services and electronic communications network services in accordance with the Electronic Communications Act.”
MARKET SIZE AND GROWTH POTENTIAL cont. * To be consolidated with the new telecommunications business plan currently under development.
LEGISLATIVE AND REGULATORY DEVELOPMENTS WITH SIGNIFICANT IMPACT ON BUSINESS Risks: • Public Service Broadcasting Bill • SABC divided into public broadcasting, commercial and international. Sentech is declared common carrier for the SABC only in terms of public broadcasting services; • declaring all Sentech’s broadcasting main sites as essential facilities; • making Sentech tariffs transparent; and • ICASA to regulate Sentech tariffs.
LEGISLATIVE AND REGULATORY DEVELOPMENTS WITH SIGNIFICANT IMPACT ON BUSINESS cont. Mitigation strategy (ies): • Role clarity between SoEs in the same sector, in order to optimise State investment; • Sentech will implement a facilities leasing strategy; • Sentech has engaged an international consulting firm NGB to assist with formulating a tariff model in the DTT environment; and • Customer Retention.
LEGISLATIVE AND REGULATORY DEVELOPMENTS WITH SIGNIFICANT IMPACT ON BUSINESS cont. Risks: • DTT Final Spectrum Plan: • ICASA has adopted a Final Frequency Plan as opposed to the Sentech Complimentary Frequency Plan (SCFP); and • This results in technical and financial implications for the project.
IMPLICATIONS OF FINAL FREQUENCY SPECTRUM PLAN • Some of the implications of the FSP are as follows: • It is not possible to replicate the current analogue television coverage. The deployment of additional sites to address the coverage shortfall and differences between analogue and digital is not technically feasible and financially viable. • Significant portion of the population would be deprived of the benefit of receiving DTT coverage by means of low-cost indoor-portable receive antennas.
LEGISLATIVE AND REGULATORY DEVELOPMENTS WITH SIGNIFICANT IMPACT ON BUSINESS Mitigation strategy (ies): • Sentech has analysed the implications of the FSP and submitted a report to the Department of Communications for consideration and approval. • Sentech will continue engaging ICASA on the implications of the FSP.
LEGISLATIVE AND REGULATORY DEVELOPMENTS WITH SIGNIFICANT IMPACT ON BUSINESS cont. Risks: • DTT Regulations and Digital Migration Reasons Document: The Regulations will substantially erode Sentech’s revenue as: • There is a provision for 2 network of frequencies (multiplexes); 1 multiplex is allocated for SABC services and the other multiplex for commercial broadcasters, etv and M-net. • The Regulations have financial implications for Sentech.
LEGISLATIVE AND REGULATORY DEVELOPMENTS WITH SIGNIFICANT IMPACT ON BUSINESS cont. Risks: • Digital Migration Reasons Document: • ICASA has resolved that encoding and multiplexing is not a licensable activity and it is not an activity that falls under electronic communications network service. Sentech role is now reduced to transmission excluding encoding and multiplexing. • There are financial implications for Sentech.
LEGISLATIVE AND REGULATORY DEVELOPMENTS WITH SIGNIFICANT IMPACT ON BUSINESS cont. Mitigation strategy (ies): • Sentech will commercially position itself to be appointed broadcasting signal distributor and multiplex operator for the future multiplexes post analogue switch off.
BUSINESS STRATEGY 1. Core Strategy: Broadcasting signal distribution • Analogue television until Digital Switch Over. • Low Power transmitters expansion in partnership with SABC (15 per FY). • Digital Terrestrial Television (DTT) • 2010 FIFA Soccer World Cup (satellite back-up infrastructure) • Radio: FM, MW, SW • DTH • Business Television and Radio • Facility Rental • Other (consulting) • Investigate the provision of mobile TV infrastructure and value added services to broadcasting signal distributors (e.g. subscriber management, interactive services, etc). Funding to implement this strategy is in place: Cash flow from business operations; DTT and 2010 WCS funding allocations.
BUSINESS STRATEGY cont. • Growth strategy options: geographic expansion / diversification into related industry • Geographical expansion (Africa strategy): • The strategy option is to acquire and/or build and/or operate and/or maintaining similar BSD networks beyond the SA borders. Funding model will be dictated by the business plan.
BUSINESS STRATEGY cont. • Diversification into telecommunications: • Rollout a converged telecommunications network offering data, voice and video – including providing coverage to the 500 Dinaledi schools. Currently, Sentech has started the process of a new telecommunications business plan which has to be financially viable. Funding to implement this strategy: R500 million funding allocated and the balance to be dictated by the business model.
PROJECT STATUS:DIGITAL TERRESTRIAL TELEVISION (DTT)AND2010 FIFA WORLD CUP SOCCER
DIGITAL TERRESTRIAL TELEVISION (DTT) • Project status and plans: • Sentech has to date procured and rolled-out transmitter infrastructure to cover just over 50% of the population. However, due to delays in the finalisation of the Frequency Spectrum Plan the DTT network has been switched on to provide only 33% population coverage. • The objective of Phase 5, commencing 1 April 2010 is to install infrastructure for two multiplexes at five high power transmitter sites, five medium power transmitter sites; and two low power transmitter sites. • Sentech will achieve 56% DTT population coverage by 31 March 2011 based on the current Budget allocation.
2010 FIFA WORLD CUP SOCCER • Project status and plans: • Sentech is currently installing infrastructure at the balance of the stadia (6) hosting the WCS (four of the 10 stadia are ready as infrastructure was installed for the 2009 Confederations Cup). • Building of the 2nd teleport is currently underway. • Sentech will hand over the required infrastructure to FIFA on 1 June 2010.
HR STRATEGY • HR strategic objectives for 2010 – 2013: • Organisational Alignment: Continuous alignment of HR practices to Company Strategy,Culture and People. • Recruitment and Retention: Sourcing and retaining the right people, at the right levels, with the appropriate competencies to lead, implement and facilitate business change imperatives. • Employment Equity • Skills Development & training The overall objective is to align skills retention with recruitment, skills development and employment equity. • Skills Development & training • Internship programme • Employee Bursary scheme • Sentech Educational Fund • National Youth Skills Development Programme
PARTICIPATION IN UHURUNET • At the directive of the Department of Communications (DoC), Sentech withdrew its participation in EASSy to participate in Uhurunet. • Sentech currently does not have equity participation in Uhurunet. • Sentech currently has a landing rights agreement with Uhurunet, in terms of which: • Sentech through its ECNS licence gives Uhurunet the right to land in South Africa; • The right is not exclusive to Uhurunet. Sentech could give that right to any other interested party; and • There are potential revenues for Sentech. • Sentech has requested DoC for permission to participate in other undersea cables.
INCOME STATEMENT * Increase in dual illumination revenue in line with increased footprint
CONCLUSIONS • BSD business is profitable. • DTT growth opportunities: licensing dependent • Regulatory & Policy Risks. • Strengthen capital structure of the business. • Telecommunication business plan.
