South Africa’s signal distributor, Sentech, has reported that the South African Broadcasting Corporation (SABC) has yet to pay off over US$56 million in debt accrued since January 2023.
According to Sentech’s CFO, Rudzani Rasikhinya, during a session with the Parliamentary Committee on Economic Development and Trade, the state-owned signal distributor faces challenges in collecting its debts. However, he assured that the company remains solvent and liquid, though its financial sustainability is at risk. “The company is still solvent and liquid, but the financial sustainability of Sentech is different. If you are not collecting debt, it threatens the sustainability and pushes for revenue diversification,” he stated.
Sentech’s financial situation has deteriorated significantly, with net profit after tax dropping from US$17 million in 2021 and US$6 million in 2022 to losses of US$7 million in 2023 and US$8 million in 2024. The presentation noted that non-payment from customers has severely impacted the company’s financial standing, leading to a drastic reduction in cash balances year-over-year.
The SABC had proposed converting this debt into a long-term loan, but this was not approved by Sentech’s board. Subsequently, a payment plan was suggested, with payments anticipated to start this quarter, yet no payments have been received.
Rasikhinya emphasized that 94% of Sentech’s revenue comes from its media broadcasting sector, which was initially established for signal distribution. Other revenue sources include broadband (1%) and telecommunications towers (5%). Sentech aims to diversify its revenue by reducing reliance on media to 45%, expanding broadband revenue to 30%, telecommunications towers to 8%, and incorporating data centres and other services by 2030.
Earlier this year, Sentech threatened to cut off the SABC’s broadcast signal due to non-payment, which could have led to a blackout. However, Communications Minister Solly Malatsi intervened, facilitating a deal that allowed Sentech to maintain the SABC’s broadcast signals for at least two months while exploring sustainable options. This includes collaborating with the National Treasury to potentially reclassify part of the SABC’s funding for debt settlement.
Media Monitoring Africa’s William Bird cautioned that the broadcaster is at risk of a blackout in May 2024. He pointed out that the government’s actively defunding the SABC could have dire consequences. Bird stated that Sentech represents a significant operational cost for broadcasters like the SABC and urged the government to manage these expenses on the broadcaster’s behalf, noting, “The scenario is catastrophic. The SABC’s finances are plummeting, and the government and Parliament fail to fulfil their responsibilities.”
Additionally, the Portfolio Committee on Communications and Digital Technologies has expressed the need for increased public funding for the SABC. However, there is an ongoing conflict between Malatsi and President Cyril Ramaphosa regarding the controversial SABC Bill that needs resolution. Malatsi attempted to withdraw the bill, arguing that it failed to address the SABC’s financial crisis and postponed the issue. Critics of the bill have raised concerns that it could grant excessive power to the minister over the broadcaster’s board, jeopardizing its editorial independence.
In response to Malatsi’s actions, Ramaphosa and Deputy President Paul Mashatile have issued a decree preventing ministers from withdrawing pending legislation without their consent. Former communications minister Khumbudzo Ntshavheni indicated that this decree would retroactively block Malatsi’s attempt to withdraw the SABC Bill.
