Mergers, Acquisitions and Financial Results

State-owned signal broadcaster Sentech is convinced its cash crunch will end when Finance Minister Trevor Manuel lets it raid a R3bn contingency reserve declared in last week's budget.

Sentech has drawn up plans to extend its broadband network to give businesses and consumers cheap and high-speed access to the internet that will cost an initial R1,2bn and a second tranche of R1,8bn.

  Yet its broadband plans received no cash at all in the budget. All it got was R318m towards its R800m project to digitise the national television broadcasting network, and R21m to invest in an undersea cable.

Yesterday chief financial officer Siddique Cassim said he was confident Sentech would be allocated cash from the contingency fund.

"Manuel mentioned that Sentech can access that money subject to the approval of business plans and regulatory requirements being adhered to," he said. "We have submitted financial business plans regarding broadband and government, in its wisdom, will do what is in their interests. We are hoping we will be successful."

Sentech needs the cash to expand its wireless network, particularly since it hopes to sign up 15000 more users within six months after launching three new cut-price, high-speed packages yesterday.

Sentech erected three base stations last month, but could afford to erect only a handful last year.

With just 56 base stations across SA, it can provide wireless coverage only to the main metropolitan areas, despite Communications Minister Ivy Matsepe-Casaburri expecting it to take internet access to people in the remotest regions.

Sentech will not disclose how many broadband customers it serves, but analysts suspect it may be below 10000. It lost many customers by withdrawing one popular internet package last year.

Cassim said reports that its broadband division was losing R1m a month were exaggerated, but losses in that division have added to overall losses that Sentech has suffered for years."I'm hell bent on turning this business around," he said last week.

If Sentech was not allocated cash from the contingency fund, it had another plan to persuade technology equipment suppliers to set up a network on its behalf. Sentech could pay to lease the capacity on that network, at a rate that would gradually let the equipment supplier recoup its investment costs. "The first port of call is government. Failing that we will look at alternatives," Cassim said.

Business Day