South African Sentech Receives R500m Boost

Mergers, Acquisitions and Financial Results

South Africa is the only country on the continent where the Government has made investments in three entirely separate companies in the telecoms sector: Infraco, Sentech and Telkom. State-owned signal carrier Sentech has received a Valentine's Day windfall of R500m to begin funding a broadband wireless network. The capital boost will help it carry out orders from the communications department to build a high-speed network that will take voice and data services to areas that are not commercially appealing to the private sector.

Sentech has been cold-shouldered by the treasury for years, leaving it unable to make any progress. The cash was finally promised in September 2007. In a note circulated to staff on Monday, Sentech said R500m was transferred into its account on February 14 as a contribution to roll out a national broadband wireless infrastructure.

"The board is still in discussions with the minister (Ivy Matsepe-Casaburri) and the communications department to agree on the business model that Sentech will implement ," Sentech executives said .

Money would remain a sticking point, however, since chief financial officer Siddique Cassim previously estimated that more than R3bn was needed to create an effective infrastructure. A source close to the company said last week that the signal carrier might also lack the skills to execute the plan, after more than 100 resignations and an acrimonious restructuring process destroyed much of its talent last year. The executive of technology who quit was not replaced, and restructuring eliminated the executive of project management and quality assurance, who had co-ordinated new roll-out plans.

The main purpose of the new network is to take telephony and internet services to hospitals, schools and rural communities. The plans have been watered down since Matsepe-Casaburri originally instructed Sentech to take high-speed internet access to businesses and consumers. Now it will focus on community services rather than commercial services. It is unclear if Sentech will receive more money in today's budget.

Business Day