The South African government has allocated over US$170 million in financial support to state-owned entities within the Communications and Digital Technologies sector over the last five financial years.
Communication and Digital Technologies Minister Solly Malatsi provided this information in response to a question in Parliament, emphasising that these funds represent cash injections rather than bailouts or guarantees.
He noted that since the 2020/21 financial year, only two entities, the state signal distributor Sentech and the South African Post Office, have benefitted from government financial assistance. The Post Office received the bulk of the funding, amounting to US$145 million, while Sentech has also required ongoing support, which totalled US$44 million.
Specifically, Sentech received US$3.3 million in 2020/21, US$3.4 million in 2021/22, and US$3.9 million in 2022/23. The funding surged in 2023/24, with Sentech receiving US$11 million, followed by US$19 million in the following year.
Financial records indicate a concerning shift for Sentech, which reported a net profit after tax of US$17 million in 2021, followed by a loss of US$6.2 million in 2022. However, the situation deteriorated significantly in 2023, with a reported loss of US$7.7 million and further losses predicted for 2024 at US$8.3 million.
Sentech’s Chief Financial Officer, Rudzani Rasikhinya, attributed these financial challenges to difficulties in debt collection from customers. According to Sentech’s presentation, “The financial position of Sentech has mostly been affected by non-payment from customers, resulting in the cash balances reducing significantly year on year.” As of November 25, 2024, the South African Broadcasting Corporation (SABC) owed Sentech US$63 million, with US$59 million of that amount dating back to early 2023.
Rasikhinya further explained that 94% of Sentech’s revenue comes from its media broadcasting services. However, the company aims to diversify its revenue streams, planning to reduce media reliance to 45%, boost broadband revenue to 30%, and expand into tower services and data centres by 2030.
In his response, Minister Malatsi noted that no CEOs or accounting officers from entities within his portfolio that reported financial losses received bonuses during this period.
