TEF 2018/21 CORPORATE PLAN TE PLAN M A 2018/21 ORPO R C ABBREVIATIONS

ASO Analogue Switch-Off ATV Analogue Television B-BBEE Broad-Based Black Economic Empowerment Board Accounting Authority BSD Broadcasting Signal Distribution BTR Business Television and Radio BTV Business Television CEO Chief Executive Officer CFO Chief Financial Officer COO Chief Operations Officer CPI Consumer Price Index CRM Customer Relations Management CSI Corporate Social Investment CSS Customer Satisfaction Survey CWU Communication Workers Union DAB Digital Audio Broadcast DoC Department of Communications DR Disaster Recovery DRM Digital Radio Mondial DTH-S Direct-to-Home Satellite DTPS Department of Telecommunications and Postal Services DTT Digital Terrestrial Television E&M Entertainment and Media ECA Electronic Communications Act, No. 36 of 2005 ECNS Electronic Communications Network Services ECS Electronic Communications Services EE Employment Equity ESD Enterprise Supplier Development EXCO Executive Committee FM Frequency Modulation FTA Free-To-Air FY Financial Year GDP Gross Domestic Product HbbTV Hybrid broadcast broadband TV ICASA Independent Communications Authority of South Africa (Regulatory Authority) ICT Information and Communication Technology I-ECNS Individual Electronic Communications Network Services I-ECS Individual Electronic Communications Services IoT Internet of Things

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 i IPTV Internet Protocol Television IMT International Mobile Telecommunications ITU International Telecommunications Union KPI Key Performance Indicator Minister Executive Authority, Minister of Telecommunications and Postal Services MUX Multiplex MDDA Media Development and Diversity Agency MHZ Megahertz MOI Memorandum of Incorporation MTEF Medium Term Expenditure Framework MTSF Medium Term Strategic Framework MW Medium Wave NAB National Association of Broadcasters NDP National Development Plan NPAT Net Profit After Tax OTT Over the Top PFMA Public Finance Management Act, No. 1 of 1999 PPCTPS Parliamentary Portfolio Committee on Telecommunications and Postal Services RDS Radio Data System SA South Africa SABC South African Broadcasting Corporation SADIBA South African Digital Broadcasters Association SD Standard Definition/Skills Development SED Socio-Economic Development SEED Social Enterprise & Economic Development SENTECH Act SENTECH Act, Act No. 63 of 1996 SKA Square Kilometre Array SLA Service Level Agreement SMME Small, Medium and Micro Enterprise SOC State Owned Company STL Studio-to-Transmitter Link SW Shortwave TR Treasury Regulation TV Television TVET’s Technical and Vocational Education Training VOD Video-on-Demand VSAT Very Small Aperture Terminal VR Visual Reality WIP Work in progress WOAN Wireless Open Access Network

ii SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 TABLE OF CONTENTS

ABBREVIATIONS AND DEFINITIONS i

1. FOREWORD BY THE BOARD CHAIRPERSON 4

2. OVERVIEW BY THE CHIEF EXECUTIVE OFFICER 5

3. ORGANISATIONAL IDENTITY, MANDATE AND STRUCTURE 6

4. PERFORMANCE REVIEW 10

5. MARKET OUTLOOK: MTEF 2018–2021 17

6. CORPORATE STRATEGY 25

7. STRATEGIC PRIORITIES 35

8. KEY PERFORMANCE AREAS 37

9. FINANCIAL PLAN 42

ANNEXURE A: GOVERNANCE STRUCTURES 49

ANNEXURE B: RISK MANAGEMENT PLAN 83

ANNEXURE C: FRAUD PREVENTION PLAN 60

ANNEXURE D: MATERIALITY AND SIGNIFICANCE FRAMEWORK 63

LIST OF TABLES

Table 1: Executive Team Profile 8

Table 2: Coverage and Service Expansion 13

Table 3: Product Performance Review (2011-2017) 14

Table 4: Employment Equity Status to 31 October 2017 15

Table 5: Training Spend 16

Table 6: Implementation of B-BBEE Initiatives 30

Table 7: Strategic Focus Areas and Outcomes 36

Table 8: Shareholder Strategic Goals and Objectives 38

Table 9: SENTECH MTEF 2018–2021 Key Performance Indicators 39

Table 10: 2018–2019 Annual Performance Targets 41

Table 11: Detailed Statement of Comprehensive Income 44

Table 12: Statement of Financial Position 47

Table 13: Cash Flow Statement 47

Table 14: Capital Expenditure Budget 48

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 1 LIST OF FIGURES

Figure 1: SENTECH Organogram 9

Figure 2: Network Performance per Service Platform 11

Figure 3: DTT Coverage 12

Figure 4: Revenue Trends (2011-2017) 14

Figure 5: Product Performance Review (2011-2017) 14

Figure 6: Media Categories and Channels 19

Figure 7: Global Media Industry by Market Size 20

Figure 8: Global Media Industry by Market Size by Region 21

Figure 9: Online Content Internet Market Size 21

Figure 10: Video Market Size 22

Figure 11: Audio Market Size 22

Figure 12: Southern Africa1 Total Entertainment and Media Market – Market Size2 23

Figure 13: Media Industry by Country – Estimated Market Size1 24

Figure 14: SENTECH’s 7 Strategic Pillars 26

Figure 15: SENTECH Growth Opportunities 27

Figure 16: The SENTECH Way 29

Figure 17: SENTECH Business Model 31

Figure 18: SENTECH’s Financial Projections (2019-2021) 43

Figure 19: Framework for Fraud and Corruption Response 62

2 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 Introduction

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 1. FOREWORD BY THE BOARD CHAIRPERSON

SENTECH herewith presents the Corporate Plan for the MTEF period 2018–2021 to the Executive Authority and the Portfolio Committee on Telecommunications and Postal Services (PCTPS). This submission is made in terms of the Money Bills Amendment Procedure and Related Matters Act of 2009; section 52 of the Public Finance Management Act (PFMA); and Treasury Regulation 29.

SENTECH is a State-Owned Company (SOC), operating in the Broadcasting Signal Distribution (BSD) and Telecommunications sector. Under the ECA, SENTECH is licensed to provide Electronic Communications Network Services (ECNS) and Electronic Communications Services (ECS).

As one of the primary enablers of government interventions in the Information and Communication Technology (ICT) sector, SENTECH’s business strategy is informed by and aligned with the Medium Term Strategic Framework (MTSF) objectives, the Strategic Goals of the Department of Telecommunications and Postal Services (DTPS) for the 2018-2021 MTEF, as well as the Company’s strategic objectives as adopted by the Board from time to time.

In the past MTEF period, the Board committed SENTECH to Seven Strategic Pillars, namely, growth, customer focus, innovation, culture change, transformation, efficiency and reputation. These Seven Strategic Pillars continue to be the compass and provide focus and discipline in executing our corporate strategy. Our growth journey continues, and this has translated in SENTECH setting the context to be responsive to its customers’ preferences to view and experience television, radio and digital content everywhere, anyhow and anytime.

SENTECH will continue to pursue strategic partnerships, acquire complementary businesses and assets which are in line with SENTECH’s core business, and explore and pursue opportunities on the African continent guided by the PFMA and National Treasury regulations.

The Board believes that this Corporate Plan will build on the foundation that SENTECH has laid in the last financial year and will facilitate efforts to enable our customers to reach their audiences anywhere through innovation. SENTECH will continue increasing efforts to place an even greater emphasis on innovation, customer satisfaction, stakeholder and regulatory management.

The current state of economic decline has presented challenges for some of our community broadcasters who have not been able to realise advertising revenues, which has a direct impact on our business revenues. Similarly, SENTECH’s major customer that is experiencing financial difficulties is a strain on the organisation’s revenues and the situation is being monitored closely by the Board.

The Company believes that corporate organisational health is defined by employee satisfaction, efficient and effective administration, competent operations, strong financial management and healthy customer and service provider relationships. SENTECH will fully embody these aspirations and will continue to build towards this nascent healthy state.

In conclusion, the Board looks forward to delivering on the commitments made in this Corporate Plan which will contribute towards fulfilling the strategic objectives of the Company and support the Department of Telecommunications and Postal Services in aligning with the government’s MTSF objectives.

M Mello Chairperson SENTECH SOC LIMITED

4 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 2. OVERVIEW BY THE CHIEF EXECUTIVE OFFICER

The Corporate Plan 2018–2021 has been prepared to provide the roadmap to achieve the strategic goals and objectives of the Company. The preparation of the Corporate Plan was informed by the following:

• The Shareholder’s strategic goals and objectives for the MTEF; • The Company’s mandate, vision, mission, strategic goals and values; • An external environmental analysis, in particular the global, continental and national broadcasting, media and ICT contexts; as well as the policy and regulatory environment including the National Development Plan (NDP), the National Integrated ICT Policy White Paper, and the National Broadband Policy which defines the parameters for SA Connect; and • The outcome of the Executive Committee (EXCO) and Board engagements, including the strategic sessions held during the year.

South Africa’s National Broadband Policy, 2013 is considered an important policy instrument that presents opportunities for SENTECH through participating in the SA Connect Project. The Company’s strategic project is the digital migration national project which will unlock the much-needed spectrum that will enable delivery of mobile broadband to all citizens. Wireless Open Access Network (WOAN), as articulated in the ICT Policy White Paper and subsequent Electronic Communications Act (ECA) Amendment Bill presents yet another opportunity for SENTECH to play a meaningful role in the ICT space. SENTECH, therefore, plans to play an active role in the WOAN in support of government policy and towards expanding its business objectives. The SA Connect Project remains the focal point of our broadband strategy to deliver internet connectivity to public sector entities.

The Company remains committed to its vision of being “a global enabler of broadcasting and digital content delivery” and its mission “to enable our customers to reach their audiences anywhere through innovation.” This reflects the growth path the organisation is pursuing during the MTEF. The Company remains committed to its Seven Strategic Pillars: growth, customer focus, innovation, culture change, transformation, efficiency and reputation, and to translating this into tangible results.

To achieve the vision and mission for the MTEF period 2018–2021, the Company will pursue a growth strategy with a focus on customer orientation which is at the heart of everything we do. In addition to pursuing business sustainability, the Company will execute acquisitive and partnership strategies to broaden our market penetration and thus increase revenues. Furthermore, the Company is poised to deliver innovative products into the market to diversify its product portfolio and meet our customers’ expectations. The Company will also strengthen its brand awareness and stakeholder relations so as to become both an employer of choice and a leading enabler of broadcasting and digital content delivery in Africa.

This Corporate Plan is a roadmap towards realising the SENTECH of the future – the SENTECH that will strengthen its core (strategic actions that will allow the existing business to reach its full potential) and position for the future (strategic actions that respond to emerging threats and that capture developing opportunities). The SENTECH EXCO and staff will pursue the defined annual performance plans with zeal and deliver on the results through focusing on strategy execution. In conclusion, I thank the Board of SENTECH for robust oversight and support in defining the direction of the organisation. Also, we put reliance on our employees whom I thank for their commitment to deliver on our strategic goals.

M Booi Chief Executive Officer SENTECH SOC LIMITED

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 5 Organisational Identity, Mandate and Structure

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 3. ORGANISATIONAL IDENTITY, MANDATE AND STRUCTURE

3.1 Vision A global enabler of broadcasting and digital content delivery.

3.2 Mission To enable our customers to reach their audiences anywhere through innovation.

3.3 Values Integrity: We act ethically, with honesty, fairness and openness;

Quality Customer Service: We are committed to proactively ensuring high levels of customer satisfaction and building a relationship based on trust;

Innovation: We endeavour to develop and support creativity and responsible risk-taking;

Accountability: We deliver on our promises and take responsibility for our actions;

Social Responsibility: We endeavour to fulfill our mandate in a manner that benefits our employees, customers, suppliers, communities and the environment in all the areas that the Company operates in.

3.4 Legislative Framework SENTECH’s legislative foundation is the SENTECH Amendment Act, No. 4 of 1999 and it is incorporated as a State-Owned Company in terms of the Companies Act, No. 71 of 2008. The PFMA and National Treasury Regulations published in terms thereof, serve as the Authority for the organisation’s financial reporting requirements. Policies have been implemented to ensure that there is compliance with all relevant legislation. The organisation is further guided by the principles embodied in the King IV Report on Corporate Governance for South Africa and the Protocol on Corporate Governance in the Public Sector, 2002.

3.5 Mandate SENTECH derives its mandate from legislation, particularly the SENTECH Act and the Electronic Communications’ Act. In 1992, SENTECH was corporatised as a wholly owned subsidiary of the South African Broadcasting Corporation. In 1996, SENTECH Act No. 63 of 1996 was amended, converting SENTECH into a separate public entity responsible for providing broadcasting signal distribution services as a common carrier to licensed television and radio broadcasters.

In 2002, following the deregulation of the telecommunications sector, SENTECH was granted two additional licenses, allowing the Company to provide international voice-based telecommunications and multimedia services. These licenses were converted into an Individual Electronic Communications Network Services (I-ECNS) and an Individual Electronic Communications Services (I-ECS), licensed in terms of the ECA.

3.6 Shareholder Strategic Goals In preparing this Corporate Plan, SENTECH is further guided by the Shareholder’s MTSF Strategic Goals for this planning period, which are:

• Strategic Goal 1: Broadband connectivity that provides secure and affordable access for all citizens to education, health and other government services and stimulates economic development. • Strategic Goal 2: South Africa has a modern, sustainable and competitive postal and telecommunications sector. • Strategic Goal 3: An Inclusive Information Society and Knowledge Economy driven through a comprehensive e-Strategy and access to government services. • Strategic Goal 4: Optimally functional Department and SOCs that effectively deliver on their respective mandates.

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 7 3.7 Corporate Goals SENTECH’s Corporate Goals for the MTEF period are the following:

• Sustainable business growth. • Achieve high levels of customer satisfaction. • Build digital capabilities and enhance connectivity.

To achieve the above strategic goals SENTECH will focus on the following:

• Acquisition of complementary companies and assets. • Wireless Open Access Network (WOAN) equity ownership. • Build broadband wireless for business-to-business (B2B) focusing on public sector with targeted technologies including high capacity microwave links and VSAT Services. • Innovation and research. • Build STLs using TVWS frequencies • Launching OTT service.

3.8 Executive Management The composition of SENTECH’s executive management team is as follows:

Name Date Appointed Position Highest Qualification

Chief Executive Officer and Mr M Booi 15 October 2015 MSc (Electrical Engineering) Executive Director Chief Financial Officer and Mr S Mthethwa 1 December 2016 CA (SA) Executive Director Chief Operations Officer and B.Tech (Electrical Mr TJ Leshope 1 March 2018 Executive Director Engineering)

Mr D Ngwenya 1 June 2016 Chief Technology Officer MSc (Electrical Engineering)

Mr I Segaloe 1 May 2016 Chief Strategy Officer MBA (Strategy & Finance)

Mr ON 3 February 2014 Executive: Finance CA (SA) Nekhavhambe Chief Marketing & Sales Master of Business Ms M Kgari 12 June 2017 Officer Leadership (MBL) Executive: Legal & Mr Z Adams 7 August 1995 BProc Regulatory Chief Human Resources BCom (Hons) Industrial Ms K Motlhabi 15 August 2016 Officer Psychology

Ms F Sefara 1 August 2014 Company Secretary LLM (Master in Laws)

Executive: Operations Masters of Business Mr M Finnis 1 March 2018 (Acting) Leadership (MBL)

Table 1: Executive Team Profile

8 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 3.9 Organisational Structure

Figure 1: SENTECH Organogram

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 9 Performance Review

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 4. PERFORMANCE REVIEW

The performance review covers the Mid-Term Expenditure Framework (MTEF) period up to 2017. The review entails operations review which includes implementation of public service mandate, network management and disaster recovery, DTT commercialisation and analogue switch-off, coverage and service expansion. Furthermore, financial, product, corporate governance and human capital reviews are done.

4.1 Public Service Mandate Implementation Review 4.1.1 Radio, Television and Internet Connectivity SENTECH fulfils its public service mandate by ensuring that citizens of South Africa have access to radio, television and other ICT services through its national network. The Company achieved 99.94% service network availability during the past MTEF across all platforms. Figure 2 below shows the network performance per service platform for the 2015-2017 MTEF period.

Figure 2: Network Performance per Service Platform

During the past MTEF period, SENTECH steadily sustained service availability across Frequency Modulation (FM), Television and Direct-to-Home (DTH) and a significant improvement in the performance of both Medium Wave (MW) and Short Wave (SW) due to technology refreshes and enhanced service management, however, Connectivity Services, which in this case refers to Very Small Aperture Terminal (VSAT) communications, has experienced challenges during the 2016 Financial Year (FY), however, the service platform was also replaced, resulting in improved services during the 2017 FY.

SENTECH remains committed to deliver service continuity with the required quality level through innovation. This entails investment in technology refresh and enhanced capabilities to efficiently manage service platforms and improve customer experiences with modern technology solutions. The benefit of the improved service level between the 2016 FY and 2017 FY is a direct result of technology refresh investments made in prior years.

4.1.2 Network Management and Disaster Recovery The organisation invested in the procurement of a network management system that has the capabilities to holistically monitor the Digital Terrestrial Television (DTT) network and other platforms. This enhanced capability allows for service performance management on a single integrated management platform. The platform optimisations continue to ensure full utilisations on the fault management, configuration and performance management approach. This allows for efficient use of resources, accurate reporting, accurate billing, secure monitoring, transparency and improved fault management.

To further improve service availability, SENTECH has operationalised its remote disaster recovery centre at the

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 11 NASREC facilities to ensure business continuity in case of a catastrophic event at its Honeydew facilities.

4.1.3 DTT Commercialisation and Analogue Switch-Off (ASO) To align with the 2006 International Telecommunications Union (ITU) Treaty and the global Digital Terrestrial Television (DTT) migration process, SENTECH deployed a digital television network across the country. This process enabled South Africa to commence with ASO during the past MTEF and a total of 32 sites have been switched on, entailing 18 Free-To-Air (FTA) and 14 Mnet sites.

In alignment with the ASO plan, it is envisaged that the remainder of the sites will be fully migrated to DTT during this MTEF period. SENTECH will continue to maximise DTT service availability throughout the migration process. Figure 3 below shows DTT coverage in green and the Burgersfort work in progress (WIP) in purple.

Figure 3: DTT Coverage

4.1.4 Coverage and Service Expansion Service deprivation and access to preferred language remain a challenge for the South African media industry. During the past MTEF, SENTECH enhanced the network for community, public and commercial broadcasters on Terrestrial and Satellite platforms. These projects resulted in improved service coverage. This includes the coverage expansion of existing public and community broadcasters and the establishment of new community broadcasters, as outlined in Table 2 below.

12 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 Table 2: Coverage and Service Expansion

Before Coverage Service Province Town Post Expansion Expansion Improvement Ikhuthani FM Mpumalanga Kwaggafontein - 698 938 698 938 Inakekelo FM Mpumalanga Kwaggafontein - 307 642 307 642 Western Cape Western Cape Cape Town - 188 708 188 708 FM Vhembe FM Limpopo Thohoyandou - 405 379 405 379 Bushveld Limpopo Thabazimbi - 8 470 8 470 Bojanala FM North-West Mogwase - 69 316 69 316 True FM Eastern Cape Ngqeleni 2 283 627 2 586 618 302 991 Thobela FM Limpopo Tshamavudzi 15 871 721 15 877 074 5 353 Ukhozi FM Eastern Cape Elands Heights/ 23 353 194 24 346 778 993 584 Umtata Umhlobo Eastern Cape Elands Heights 28 792 441 28 860 230 68 789 Wenene FM East Coast KZN Ulundi - 703 452 703 452 Radio Beat FM Free State Bloemfontein - 665 344 665 344 Rhythm FM Eastern Cape Umtata - 512 280 512 280 Rhythm FM Eastern Cape Butterworth - 337 789 337 789 Capricorn FM Limpopo Ga-Mabula - 63 246 63 246

Total Coverage Improvement 4 706 825

4.2 Financial Performance Review 4.2.1 Profitability Analysis The revenue performance for the year was acceptable given the tough economic conditions experienced during the past few financial years. The 2017 turnover increased marginally on prior year by 5% to R1.23 billion due to growth in FM Radio, Satellite and Connectivity services. This growth came mainly from the expansion of services platforms and activation of new customers.

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 13 Figure 4: Revenue Trends (2011-2017)

Figure 4 above indicates that business operations achieved above the 10% target increase Earnings Before Tax and Interest (EBIT) margin, but EBIT has taken a big knock over the 2017 year where it hit significantly lower that the target. The main reason for the drop was the increase in employee costs, preventative maintenance, satellite rental and the increase in the provision for doubtful debts. SENTECH had to fill some of the critical vacancies to position the Company for growth, and strengthen some of the areas which are important for the improvement of the overall efficiency of the organisation.

Overall, the Company reported a net profit of R104 million, which was boosted by the interest income of R64 million from surplus cash funds invested. There was a deliberate effort to preserve cash throughout the financial year. This was achieved by reprioritising capital expenditure; and executing only the most critical projects. The Company continued to generate positive cash flows from operations in 2017, despite the pressures already mentioned above, and closed the year with a cash balance of R907 million. The significant drop in cash generated from operations in 2018 FY forecast is mainly due to one major customer and some community broadcasting customers that have not been able to pay for the services provided.

4.2.2 Product Performance Review The table below indicates that the TV and Radio businesses have been growing at a steady inflationary rate. The DTH and facility leasing businesses showed significant growth following new revenue streams achieved between 2011 and 2017.

Table 3: Product Performance Review (2011-2017)

2014 2015 2016 2017 2018 TV 6.9% 6.7% (2.3%) 3.6% 8.4% FM 7.9% 9.1% 20.6% 9.7% 6.8% MW 16.5% 5.5% 14.% 4.0% 28.0% SW (16.7%) 24.5% 14.2% (11.2%) 9.9% DTH 25.7% 76.1% 35.7% 8.9% (6.3%) Facility Rentals 16.1% 16.0% 10.1% 10.7% 8.1% VSAT (44.9%) (20.8%) (40.3%) 12.2% (1.1%)

14 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 The product performance overview shows DTH performance increased in 2015, even though subsequent performance shows reduced growth with a marginal increase in 2017, and SW revenue continued to decline due to technology obsolescence and decreasing service demand. VSAT Connectivity has been in the decline and showed a positive increase in 2017. Facilities rentals has shown steady revenue growth over the period. During the 2018/19 financial year, SENTECH will continue to monitor its product and service performance and introduce enhancements to the existing portfolio to ensure business sustainability into the future, with particular focus on SW and connectivity services.

4.3 Corporate Governance Review SENTECH has seen a definite improvement in corporate governance within the Company since the 2010/11 financial year. The practice of sound governance informs SENTECH’s daily business activities and is a prerequisite for the achievement of the Company’s objectives. Governance assures our stakeholders that SENTECH is well managed and operating with integrity and accountability. Towards this end, SENTECH ascribes to the King IV Report on Corporate Governance for South Africa, 2016 (King IV). SENTECH is focused on creating sustainable value that positively impacts our business, our people and society, and our environment.

SENTECH is committed to instil a culture of ethics throughout the Company and to proactively identify fraud and corruption, and risks impacting on its performance objectives.

Irregular expenditure has been reduced from R84,4 million in 2010/11 to R3,805 million in 2016/17. The number of reportable findings in the audit report has reduced from 15 in 2010/11 to nil in the 2014/15, 2015/16 and 2016/17 financial years. For the past five financial years, SENTECH has received an unqualified financial audit opinion and there were no reportable findings with respect to achievement of predetermined objectives, compliance with legislation and the effectiveness of the internal control environment.

4.4 Human Capital Review Attracting top talent remained a key strategic focus area during the previous MTEF period. Thus, significant progress was made in appointing the right talent with the right capabilities to drive strategy implementation for the organisation.

An Employment Equity (EE) and Skills Development Committee was successfully established to facilitate the appointment of equity candidates to the organisation, in line with the set EE targets. The EE status as at 31 October 2017 is reflected in Table 3 below.

Table 4: Employment Equity Status to 31 October 2017

Occupational Male Female Total Levels African Coloured Indian White African Coloured Indian White Top 7 0 1 0 3 0 0 0 11 Management Senior 8 1 1 2 7 0 0 0 19 Management Professionally 46 5 2 22 23 2 1 5 106 qualified and experienced specialists and mid- management

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 15 Occupational Male Female Total Levels African Coloured Indian White African Coloured Indian White Skilled technical 122 12 10 46 108 3 3 6 310 & academically qualified workers, junior management, supervisors foremen and superintendents Semi-skilled & 21 1 0 0 21 5 2 4 54 discretionary decision- making Unskilled 39 7 0 0 3 0 0 0 49 & defined decision- making

Total 243 26 14 70 165 10 6 15 549 Permanent

For the MTEF period 2017/18, University Collaboration of R1,5m to each of the three institutions amounted to R4,5m and brings the Socio-Economic Development spend to R13,880m. This is 61.7% of the 6% of payroll target of which 95.5% is EE spend. The Workplace Skills Plan (WSP) for 2017/18 includes 1 751 planned courses for the current year of which 85% is the minimum delivery target.

Table 5: Training Spend

Training Amount Staff training R4 060 904.28 Research and bursary support R4,5m for University collaboration Need to invest a total of R2 272 167.00, Investment costs afforded is R1m Internships R290 442.99 this year on the tail of the last group of interns

Total R8 560 904.28

SENTECH continues to strive for zero fatalities and injuries in the workplace by promoting a culture of employee wellness and safety. The number of injuries on duty reported was within the total recordable incident rate limit of 1% at an annual average of 0.0397%.

During the 2016/17 financial year, SENTECH embarked on an organisational-wide culture change journey, which involves engaging, socialising and workshops with all levels of staff. This remains a priority for SENTECH, as a shared culture is an enabler for the organisation to achieve its overall objectives.

SENTECH has a long history with the Communication Workers Union (CWU), due to its unionised workforce. The quality of relationships with the union has varied over time and, in recent years, has significantly improved, albeit with some tensions that have arisen recently following the breakdown in salary negotiation. However, the Executive team and the CWU national leadership have committed to working together for the good of the Company and its employees. A healthy relationship and partnership between management, employees and the CWU is crucial for the achievement of SENTECH’s strategic objectives.

16 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 Market Outlook: MTEF 2018–2021

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 5. MARKET OUTLOOK: MTEF 2018–2021

The market outlook provides the context in which the corporate strategy and plan was developed. It includes an analysis on policy and regulatory framework affecting the organisation. An analysis is also provided on the global broadcasting trends, online content and the Southern African market context.

5.1 Policy and Regulatory Framework 5.1.1 700MHz and 800MHz Band The 700MHz and 800MHz band (694-790MHz and 790-862MHz), also known as Digital Dividend II and I respectively, has been the most contested band since WRC-12. The band is currently used by broadcasters for terrestrial television broadcasting services.

The band has been identified for International Mobile Telecommunications (IMT) applications for both coverage and capacity purposes. Africa, as a region, is striving to agree on harmonised channel plans for 700, 800, 850 and 900 MHz bands with the envisioned outcome of economies of scale, reduced network implementation costs and interoperability to enable ease of regional roaming.

This framework will ease the introduction of IMT services in the bands 700 and 800 MHZ, with minimum negative impact on existing services.

5.1.2 Community Broadcasters Community broadcasters (both visual and audio) continue to face funding and governance challenges resulting in sustainability challenges. The issues of community broadcasters were addressed by the Department of Communications (DoC) and Independent Communications Authority of South Africa (ICASA), in separate but linked processes. These challenges impact on the ability for community broadcasters to pay for transmission costs to SENTECH. This effectively affects the ability of the organisation to continue providing the services without receiving payment. The matter is being dealt with by the DoC and the MDDA.

5.1.3 Review of the Broadcasting Framework The process of developing broadcasting framework and the introduction of terrestrial digital sound broadcasting policy are underway. It is expected that the policy on the broadcasting framework will address the following subjects, inter alia:

• Redefining broadcasting; • Spectrum licencing for broadcasting services; • Redefining licencing categories; • Digital sound broadcasting (DSB); • Redefining community broadcasting.

The need to introduce Digital Audio Broadcast (DAB+) and/or equivalent technologies by broadcasters also speaks to ensuring continued sustainability of the “traditional” yet evolving broadcasting industry. The introduction of digital radio policy will assist the radio industry growth that is currently challenged by spectrum congestion, particularly in high metros.

5.1.4 Electronic Communications Amendment Bill The DTPS has published the ECA amendment Bill (“Bill”) to consider and legislate the proposals set out in the ICT integrated Policy White Paper. Amongst principal proposed changes are the following:

• Wireless Open Access Network (WOAN) • Licensing framework for the WOAN • Radio frequency spectrum trading and sharing • Minister’s oversight role in implementing the WOAN

18 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 • Establishment of a National Radio Frequency Spectrum Planning Committee within the DTPS • The designation of licensees to whom universal service and access obligations are applicable • The prescription of empowerment conditions in terms of the ICASA Act, etc. The Bill does not address the subject of broadcasting, except the reference to co-ordination of broadcasting spectrum issues between DoC and DTPS.

The Bill, in combination with the rationalisation process, community broadcasting funding strategy and the proposals expected in the draft policy on broadcasting issues, will have major impact on the current format of SENTECH.

With virtual reality (VR) expanding to more devices, SENTECH seeks the opportunity to participate in the convergence of network for ubiquitous coverage. The combination of VR and personalised content offering is one of the many next best viewer experience concepts that is going to revolutionise content consumption. The significance of the synergy between telecommunications and broadcasting frameworks will determine SENTECH’s relevance and subsequently the Company’s aptitude to survive. The journey to a purposeful digital transformation process is empowered by futuristic and certain telecommunications and broadcasting regulatory frameworks.

5.1.5 Obligations SENTECH is in discussions with ICASA on the proposed amendment of Company’s universal service and access license obligations (“draft obligations”). The draft obligations propose that SENTECH should provide an e-Learning Solution Platform to all Technical and Vocational Education and Training colleges (TVETs) nationally. The discussions are premised on the scope of the project and the affordability of the draft obligations.

5.1.6 Global Broadcasting Context The following outlines developments in the global broadcasting environment that were taken into consideration as part of a market analysis. Five media categories and channels were reviewed, three of which are directly relevant to SENTECH.

Figure 5: Media Categories and Channels

Source: PwC Global Entertainment and Media Outlook 2015-19

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 19 5.2.1 Global Media Industry – Market size The global media industry is expected to grow but will experience decreasing growth rates due to large developed regions (Europe, USA, etc.) reaching saturation point. The corresponding growth in smaller developing markets is insufficient to cover the gap. Further pressure will originate from the decline in advertising expenditure as advertising customers increasingly seek to make efficient use of their advertising spend by focusing on fewer platforms that have a wide reach and lower price points.

Digital revenue growth will be driven by increased internet penetration from the proliferation of wireless internet services at increasingly reduced prices. Product innovation within the digital space will continue to fuel the demand for internet services e.g. Streaming services; e-Sports; Virtual reality; etc.

Video will maintain its market share mainly due to continued usage by the older generation and emergence of smart TVs that allow for both traditional and digital TV consumption. It is also the medium of choice in regions that do not have a strong internet connection as is the case in many developing countries.

Figure 6: Global Media Industry – Market Size1 (2011-2019, USD Billion)

Source: PwC Global Entertainment and Media Outlook 2015-19

5.2.2 Global media industry – Market size by region The global trends hold firmly on a regional level with most of the media market growth seen in Asia Pacific and Latin America. Market growth will be characterised by cannibalisation of audio, print and TV share by digital content revenue. Decrease in the Europe and Middle East Africa (EMEA) market share is largely driven by the saturation within Europe and Middle East which cannot be compensated for, by expected growth within Africa.

20 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 Figure 7: Global Media Industry – Market Size by Region (2011-2019, USD Billion)

Source: PwC Global Entertainment and Media Outlook 2015-19

5.2.3 Online Content – Internet Market Size Figure 8: Online Content – Internet market size (2011-2019, USD Billion)

Source: PwC Global Entertainment and Media Outlook 2015-19 The digital market share is driven primarily by the growth in the internet market as this forms the backbone of digital content distribution. Mobile internet is the largest segment and has the highest growth potential, driven primarily by the surge in smartphone penetration. The increase in internet adoption rates will fuel increasing content consumption on internet. Advertising revenue growth will ease as advertisers follow the crowd and optimise spend.

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 21 Within the video market, TV is split between FTA and Pay-TV and remains the largest segment. TV series and movies stand out as the most popular genres representing nearly half of the total viewing time. However, the industry is shifting from linear TV towards non-linear digital viewing. Video on Demand and Pay-per-view under Pay-TV, are the fastest growing sub-segments and expected to grow at ~15% with Video on Demand representing every third hour spent watching TV. Growth in the cinema segment will be primarily driven by local films although Hollywood will continue to dominate the market.

Figure 9: Video Market Size (2011-2019, USD Billion)

Source: PwC Global Entertainment and Media Outlook 2015-19

Consumer preference is shifting towards streamed on-demand video due to:

• Increased internet penetration • Rise of over-the-top content providers • Emergence of connected screens e.g. Smart TV • ‘Binge’ watching phenomenon – viewing of multiple episodes in one sitting • Need to control TV line-up due to lifestyle trends that limit traditional TV time • Increase in user generated content.

Figure 10: Audio Market Size (2011-2019, USD Billion)

Source: PwC Global Entertainment and Media Outlook 2015-19

22 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 Within the audio market, live music will be the highest growth segment due to the extension and expansion of tours as global income rises. Recorded music’s decline is due primarily to the rise of competing streaming services with lower price points whilst radio revenue will be driven mainly by digital.

5.2.4 Market Context – Africa Locally, Africa exceeds the average growth rates in all areas, even in traditional media where growth rates are stagnating. Africa holds considerable untapped potential in media across all categories, however, the potential differs by country. Traditional media continues stable growth but is under threat from digital. Over the top distribution is on the rise due to improved internet infrastructure, smartphone penetration and entrance of new players e.g. Netflix and ShowMax.

5.2.5 Market Context – Southern Africa Despite different macroeconomic conditions compared to the rest of the world, the Southern African media market is expected to undergo the same trends as those seen globally. The largest markets in this grouping include South Africa, Nigeria and Kenya.

Figure 11: Southern Africa1 total Entertainment and Media Market – Market Size2 (2012-2019, USD Million)

Source: PwC Global Entertainment and Media Outlook 2015-19

5.2.6 Media industry by country – Estimated market size On a country level, the trends remain consistent. Although still better than other African countries in terms of market size, South Africa’s growth is restricted by decreased Gross Domestic Product (GDP) performance. Digital has anchored itself in the market due to an established middle class, healthy competitive environment that improves quality and price points, together with solid internet infrastructure. South Africa’s over-the-top revenues are expected to increase at a faster rate than those of the whole continent. Video is still relevant but under threat as connected screens move users more towards the digital space.

Due to population size and internet penetration, expectations were that Nigeria’s media market would rival that of South Africa, however, Nigeria lags due to insufficient internet coverage and speed of service to support meaningful internet video revenue. Pay-TV consumption comprises mainly of low-priced bouquets and digital stems from internet access for communication purposes largely – video consumption is still limited. Despite all this, Nigeria is expected to have the largest growth of the three countries due to expected increased media consumption.

Improved internet access in Kenya is driven mainly by smartphone usage which is supported by developed internet infrastructure. The digital market has attracted new players such as iFlix from Malaysia. The growth in digital has revived the news sector as access to digital newspaper applications has increased viewership.

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 23 Figure 12: Media Industry by Country – Estimated Market Size1 (2011-2019, USD billion)

Source: PwC Global Entertainment and Media Outlook 2015-19

5.2.7 Opportunities and challenges for SENTECH • Revenue diversification in the digital media market • Upskilling of employees on digital skills and new technologies are required to address the rapidly changing consumer needs • The development of innovative products and services relevant to both existing and new customer • The increase in competition presents an opportunity for SENTECH to leverage its position as an established digital content distributor within Africa.

24 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 Corporate Strategy

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 6. CORPORATE STRATEGY

SENTECH has developed a corporate strategy that responds to challenges and the changing market conditions as discussed in section 5 above. To address these challenges SENTECH will adopt a ‘enhance and fly’ approach to create a ‘SENTECH of the future’. ‘Enhance’ denotes all activities required to strengthen the core whilst ‘fly’ refers to all activities required to position the organisation for the future.

SENTECH’s traditional core business has been broadcasting signal distribution in South Africa which contributes 94% of gross revenue through TV and Radio. The 5% comes from Facilities leasing whilst remaining 1% from connectivity services through VSAT.

To strengthen the core for SENTECH means defending the market share within the traditional media distribution through innovation and leveraging on existing businesses. However, to position for the future would mean expansion on the broadband market because as pointed earlier, large value potential exists if connectivity portfolio is expanded. SENTECH will thus develop and implement a Broadband Strategy that will position SENTECH in the fixed wireless broadband market to become government’s preferred last mile provider.

The “enhance and fly” approach addresses both SENTECH’s challenges as it accelerates and enhances both value delivery and capability development. This is the most sustainable route for transformation given limited capabilities, it will be difficult to support a pure ‘fly’ approach. The organisation will become impatient with a pure ‘enhance’ approach as this will take time to materialise.

6.1 Seven Strategic Pillars The corporate strategy is aimed at ensuring sustainable business growth. The strategy considers the need for revenue growth in the context of technology disruptions, the future of broadcasting, changing consumer behaviour and socio-economic transformation imperatives.

SENTECH’s corporate strategy hinges on the Seven Strategic Pillars as shown below, namely, growth, innovation, customer focus, culture change, efficiency, transformation and reputation.

Figure 13: SENTECH’s 7 Strategic Pillars

26 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 STRATEGIC PILLAR 1: GROWTH Growing our revenue is critical to ensuring the sustainability of our business. This will be achieved by implementing the following:

• Leverage our existing businesses. SENTECH aims to leverage existing television, radio, infrastructure and connectivity businesses. This includes DTT commercialisation, value-added services (OTT) and digital radio (Digital Audio Broadcast [DAB+], Digital Radio Mondiale [DRM], Hybrid Radio and Streaming (OTT), advert monitoring and syndication, Radio Data System [RDS]). The current facilities leasing business is consolidated under Managed Infrastructure Services to include 3rd Party facility management, facilities leasing and managed network infrastructure services. Connectivity solutions will include wireless broadband and Internet of Things (IoT). • Expand to Pan-African markets. SENTECH will expand its business to selected African countries to provide broadcasting services such as DTT solutions, project management and consultancy services. • Acquire new businesses and assets. Growth through acquisitions of complementary businesses and assets will be pursued in the next three years. This will be done to diversify revenues by seeking opportunities that will accelerate revenue growth. The acquisition strategy considers the strength of SENTECH’s balance sheet, optimal capital structure (debt/equity), risk appetite, funding models, due diligence and acquisitions required in terms of the PFMA. • Form strategic partnerships for opportunities. Building strong partnerships is key to growing SENTECH’s business for mutual benefit, risk mitigation and synergies. These partnerships will be formed for implementation of specific projects, products and innovation, and for entry into the Pan-African and international markets. • Deploy wireless broadband. SENTECH will build and deploy broadband wireless for B2B focusing on public sector with targeted technologies such as High Capacity Microwave links and VSAT services.

In support of the above growth strategies, the organisation has identified the following growth options: Figure 14: SENTECH growth options

SENTECH needs to explore both organic and inorganic growth options which will require:

Growth of current product/service offerings

• Increase market share within each product offering • Review pricing structure to become more competitive • Explore new markets for existing products

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 27 New product offerings

• Review and understand market requirements • Identify new products • Sell to new and existing markets

Adjacency acquisitions/partnerships

• Identify acquisitions and partnerships • Investment opportunities.

STRATEGIC PILLAR 2: INNOVATION As a technology company, SENTECH is positioning itself to lead innovation in broadcasting and digital solutions. The Company has been lagging in this area, however, innovation is now a strategic area of focus given the disruptive nature of the technology industry and global trends. The following will be executed:

• Design new solutions for current and potential customers. The Customers Satisfaction Survey indicated the need to bring new solutions for customers. Some of the proposed solutions include hybrid radio and streaming, advert monitoring and data analytics, Hybrid DTT, satellite and OTT. • Implement a research programme. The research programme will focus on Cloud, OTT and DTT value add, receiver technology, new business models and business cases and IoT. Research will be done in partnership with reputable industrial and technology research institutes. This will include identification and formation of strategic partnerships to drive innovation.

STRATEGIC PILLAR 3: CUSTOMER FOCUS Customer orientation and focus will remain the key strategic thrust and will be achieved by attaining the following:

• Operating and maintaining a reliable network. A reliable and available network is core to SENTECH’s business. Maintaining an average weighted available network of 99.80% over the years has been the Company’s key success and it will continue to deliver for all its TV, FM, MW, SW and DTH products. • Respond promptly to customer queries. By ensuring customer relationship management (CRM) is in place to register customer queries and maintain the Service Level Agreement (SLA), a speedy response to customer needs will be ensured. • Charge competitive tariffs. SENTECH will ensure a competitive pricing model for its product offering. • Exceed customer expectations. Customers see SENTECH as a technology company. By being more innovative and living up to its brand promise, customer expectations can be exceeded.

STRATEGIC PILLAR 4: CULTURE CHANGE Core to achieving the strategic objectives and implementing the strategy is the need for a shared culture for SENTECH. As part of creating a culture that promotes accountability, cross collaboration, leadership excellence and innovation, SENTECH has implemented ‘The SENTECH Way’ that is shared and understood by all employees. The SENTECH Way encapsulates the behaviours that enable strategy focus and execution throughout the organisation. Figure 15 below depicts The SENTECH Way.

28 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 Figure 15: The SENTECH Way

Sources: Adapted from various culture models i.e. (Shingo Institute, Vadin Kotelnikov and Bersin)

STRATEGIC PILLAR 5: TRANSFORMATION The socio-economic transformation strategy is aimed at redressing the triple challenges of unemployment, poverty and inequality. Focus will be on executing the following:

• Support for ICT Small, Medium and Micro Enterprises (SMMEs). Through the Enterprise and Supplier Development Programme, the Company will ensure compliance with ICT codes by providing both financial and non-financial support to qualifying SMMEs in the ICT sector. The support will be in the form of preferential procurement, actual Net Profit After Tax (NPAT) spend on enterprise development and financial grants. • Implement B-BBEE initiatives. The Amended ICT Sector Codes require SENTECH’s compliance and a high-level score on four elements, namely, Management and Control, Skills Development (SD), Enterprise Supplier Development (ESD) and Socio-Economic Development (SED). SENTECH plans to improve its current Broad-Based Black Economic Empowerment (B-BBEE) Level Four and the following will be put in place to ensure implementation of B-BBEE initiatives to increase SENTECH B-BBEE scoring:

B-BBEE Elements Initiatives Management and Control Recruiting more black females at Executive and senior management Skills Development (SD) Training to focus more on core ICT skills Provide training for unemployed black people Retaining most of the interns Enterprise Supplier Increase preferential procurement for black owned ICT SMMEs Development (ESD) Increase preferential procurement for black female owned ICT SMMEs Actual NPAT spend of at least 2% for supplier development Actual NPAT spend of at least 3% for enterprise development Socio-Economic Actual NPAT of at least 1.5% on socio-economic development programmes Development (SED) Support Maths and Science Programme

Table 6: Implementation of B-BBEE Initiatives

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 29 • Partner to support socio-economic initiatives and corporate social investment (CSI). SENTECH will continue living its values of social responsibility and being a good corporate citizen by supporting CSI initiatives and collaborating with relevant stakeholders. Initiatives such as Mandela Day, SENTECH’s Chairman’s Charity Fund Raising Golf Day, and others that make a difference in the lives of underprivileged groups and individuals, will be implemented in partnership and with minimal cost to the Company. SENTECH’s role will be to mobilise resources and volunteers to give their time and energy in support of such good causes.

STRATEGIC PILLAR 6: EFFICIENCY Efficiency as a strategic initiative is aimed at streamlining processes and systems to increase productivity, cut inefficiencies and improve profitability. The following will comprise the efficiency drive:

• Drive down the cost of doing business. Guided by National Treasury’s Cost Containment directives and internal measures, SENTECH will ensure that its cost of doing business decreases. By improving efficiencies, and better contract management and price negotiation with suppliers, key cost drivers such as employee, satellite, operations and cost of sales costs will be minimised. • Automate processes. Almost half of SENTECH’s processes still need to be automated. In the past financial year, completion of the System Application and Products (SAP) Phase 2 upgrade, including modules such as Customer Relationship Management (CRM), Supply Chain Management (SCM) were implemented to improve efficiencies and response times. • Reduce the use of paper and energy. SENTECH aims for a paperless and digitised office, as well as energy efficiency, to reduce its carbon footprint on the environment. Energy is one of SENTECH’s biggest operational costs and can be reduced through the implementation of alternative energy sources.

STRATEGIC PILLAR 7: REPUTATION The way in which SENTECH conducts its business is affected by and affects a range of stakeholders. Reputation management is a key strategic imperative that is central to the Company’s sustainability. To ensure good reputation and stakeholder management, the Company will embark on the following:

• Influencing public policy. SENTECH will continue to participate in ICT and broadcasting public policy and regulatory discussions through various fora and submissions. The Company will position itself as a thought leader in public discourse that affects its industry. • Continuous stakeholder engagement. Stakeholder engagement has become central to how business is done at SENTECH. Through the implementation of the stakeholder management strategy, engagement will continue with stakeholders such as the Shareholder, regulators, employees, organised labour, customers, suppliers, government and agencies, public, media and social partners. • Position the brand. The SENTECH brand will be positioned in the minds of stakeholders, nationally and on the continent, as a leading, innovative, agile, caring, transforming, employer of choice and a successful enabler of broadcasting and digital content. The SENTECH brand will be visible and likeable. Investment will be made in understanding our stakeholder perceptions, building the brand through various brand initiatives, including public relations, promotions, website and social media. • Applying the best corporate governance practices. SENTECH will apply the governance principles espoused in King IV in creating value for the shareholder.

6.2 Business Model The Board has reviewed the SENTECH Business Model to ensure that the Company is prepared for the converged digital communications ecosystem. The current business model, which puts more emphasis on across-the-board research, development and innovation, has products and services focused in three categories, namely, Content and Multimedia Services, Infrastructure Management Services and Connectivity Services as shown below in Figure 16.

30 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 Figure 16: SENTECH Business Model

6.2.1 Content and Multimedia Services Content and multimedia services cover broadcasting signal distribution services, including business television delivered via satellite. There are other value-added services that form part of this service, such as OTT, broadcast monitoring and syndication and Hybrid Broadcasting (e.g. HbbTV and Hybrid Radio), which according to the SENTECH Product Development Blueprint are in the development stage, to be followed by beta testing before going to market.

Terrestrial Television

Analogue Television (ATV) signal distribution remains the major revenue contributor for SENTECH. The service revenue projection for the MTEF considers implementation of DTT and will remain linked to inflation tariff increases. Since the announcement of the performance period by the DoC Minister, the Square Kilometre Array (SKA) in the Northern Cape has been fully digitised through the implementation of the ASO Regional Plan, which will continue during the performance period. The future sustainability of SENTECH is intricately linked to the successful launch and mass household uptake of the FTA commercial DTT service. To assist broadcasters with their migration requirements, SENTECH has developed an ASO tariff model that has components of both analogue and digital tariffs and will be implemented in line with the Regional ASO Plan.

Growth of DTT is anticipated based on the licensing of additional broadcasters on the third Multiplex (MUX 3). SENTECH will leverage its existing capabilities to enable licensed future DTT customers to reach market quicker. Potential broadcasters will be engaged on this multiplexer to enable the completion of the network build programme in accordance with the licensing conditions.

Business Radio and TV

SENTECH’s business television and radio services currently operates in a linear environment. The evolution of the product will create a multi-platform environment, where business communications services, at store level, are available on multiple devices for consumers to interact with their retailer of choice. Services on offer will be traditional satellite broadcasting, push VOD, live streaming and Internet Protocol Television (IPTV). Engagements with existing Business Television (BTV) and Business Television and Radio (BTR) customers will take place in the 2018/19 financial year for potential migration to a digital media services platform.

Direct-to-Home (DTH)

Content Platform Applications

It is envisaged that the future growth of the DTH market will be driven by multi-channel bouquet operators. SENTECH will continue to provide an open access and interoperable DTH platform, with a focus on super programme aggregators. This approach will see SENTECH provide an array of services along the broadcasting value chain ranging from, but not limited to, up-linking, multiplexing, encoding and transcoding to playout.

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 31 Business Applications

SENTECH will continue to explore the enhancement of the BTV offering with solutions such as digital signage beyond linear DTH. This will provide businesses with flexibility regarding their in-store or in-campus advertising and communication.

Audio-Visual OTT/On-Demand Services

SENTECH recognises a growing trend for partnerships between platform providers, broadcasters, media companies and network operators in providing OTT services. As such, SENTECH has an objective of offering the OTT service as a value added service to broadcasters and customers. SENTECH will continue to explore how best to support players in enabling them to provide services such as catch-up, streaming and video-on- demand, and will work to assist broadcasters and other players to fulfil the growing demand from consumers.

Audio-Visual Value-Added Services

Hybrid broadcasting and smart TV platforms are proving to be a good opportunity for broadcasters to provide additional engagement for consumers. In 2015, Digital UK and Freeview co-developed and launched Freeview Play, which is a Hybrid broadcast broadband TV (HbbTV) service. HbbTV and SmartTV platforms allow broadcasters to offer applications such as catch-up TV and streaming video, as well as radio.

Hybrid radio presents broadcasters with an opportunity to keep the audience more engaged and offer more interactivity, with services such as voting songs up or down in popularity, cover art, the ability to find out more about what is playing and seamless switching between the broadcast signal, e.g. FM and internet streaming where there is poor to no coverage.

SENTECH will continue to develop and implement hybrid broadcasting platforms and support technologies to enable broadcasters to exploit the opportunities introduced by these platforms.

Broadcast Monitoring and Syndication Value-Added Services

The broadcast monitoring platform will enable a broadcaster to track on air advertisements (ads) automatically for competitive analysis, ads verification, validate ad placement or regulatory purposes. It will also allow broadcasters to archive content monitored, analyse what content brings the highest number of viewers/ listeners, monitor broadcast quality and ensure ad duration is accuracy.

Broadcasting syndication platform will enable authorised broadcasters to broadcast television or radio programmes by multiple television/radio stations without going through a broadcast network. The three main types of syndication are first-run syndication, where a programme is broadcast for the first time as a syndicated show and is made specifically to sell directly into syndication. The Off-network syndication where a programme that originally aired on a network is licensed for broadcast on another network. The Public broadcasting syndication is where competing broadcasters share resources and rebroadcast each other’s programmes.

FM Radio

SENTECH will continue to optimise the FM radio network to improve availability to guarantee advertising revenue for broadcasters and quality of service for listeners. SENTECH operates a network comprising 285 transmitter sites to provide FM radio signal distribution services to the public and commercial and community broadcasters, using a radio frequency spectrum between 88 MHz and 108 MHz. This transmitter network supports 18 public radio services, 20 commercial radio services and 123 community radio services.

SENTECH is committed to increasing accessibility to community broadcasters by continuing with provincial workshops with the participation of key stakeholders including ICASA, the Media Development and Diversity Agency (MDDA), the DTPS and the DoC.

Given the moratorium on community sound broadcast licensing, SENTECH anticipates fewer community broadcasters being licensed in the 2018/19 financial year, however, SENTECH is committed and remains ready to enable broadcasters as they are licensed, to increase universal access. The viability of community broadcasters, however, remains a challenge that affects the organisation’s business as a provider of signal distribution services. Several engagements have been held with stakeholders such as the DoC and MDDA to identify appropriate solutions and models for the struggling community broadcasters’ market.

32 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 Furthermore, SENTECH will continue to engage the commercial broadcasters, licensed in secondary markets, with the objective of rolling out their networks as soon as they are ready. SENTECH will also continue to offer network optimisation solutions to existing commercial broadcasters. This will allow broadcasters to determine appropriate, differentiated service levels in line with their business objectives. Enhancements that will allow multiple-platform access to broadcast content will be offered to customers.

For the public broadcaster (SABC), SENTECH intends to roll out the remaining radio services through the FM and Language Expansion Project, in line with the public broadcaster’s strategic objectives. FM expansion aims to diversify radio language services across all provinces. Network access redundancy options will also be offered to the public broadcaster. SENTECH, together with the public broadcaster, intends to analysis of the transmitter sites infrastructure and equipment with the aim of developing SLAs per site which might result in sites upgrades in line with the public broadcaster’s strategy.

Value-added services, such as distributed dynamic RDS and internet audio streaming platform services, broadcast monitoring and syndication will be developed over the MTEF period and the rollout of Digital Audio Broadcasting (DAB+), once commercially available (after ASO), will offer further opportunities for growth.

SENTECH will work closely with industry partners to review other emerging digital technologies and assess feasibility to deliver digital services within the existing FM spectrum capacity.

DAB+

SENTECH, in conjunction with the National Association of Broadcasters (NAB) and the South African Digital Broadcasters Association (SADIBA), successfully completed a technology trial of DAB+ transmission in Gauteng in November 2015.

We believe DAB+ to be a key growth area for the radio business, as it unlocks numerous opportunities for new and existing broadcasters. It is envisaged that DAB+ will exist alongside analogue FM radio for the next 10 to 15 years.

MW Radio

MW radio broadcasting signal distribution services are provided over eight transmitter sites, using the radio frequency spectrum 535,5 kHz–1606,5 kHz. This transmitter network supports two public broadcaster radio services, two commercial radio services and five community radio services.

Growth projections for MW are informed by the commercial MW licenses issued by ICASA and the on-boarding of a self-providing commercial MW broadcaster. Further growth is dependent on the evolution of MW from analogue to digital standard DRM MW. Digital radio broadcasting will serve as a spectrum-efficient, high quality option for broadcasting. SENTECH completed a DRM MW trial for Radio Pulpit, using a low-profile antenna that showcases the technology.

SW Radio

SENTECH’s mandate is to provide universal access to electronic communication services and electronic communications network services. In addition to delivering on this mandate, it is the aim of SENTECH to remain commercially sustainable, however, this has proven to be a challenge in respect of the SW radio product, which has continuously generated a loss due to high maintenance costs and low uptake of the service. The Board has approved the digital evolution of SW which will see the phase out of the analogue SW platform. The commercialisation of DRM aims to address the high support and maintenance costs associated with the current analogue SW platform.

6.2.2 Managed Infrastructure Services

Most of SENTECH’s customers own a network of some sort. With its vast experience in managing different types of networks, from broadcasting to telecommunications, SENTECH has built up a strong capability in network design, deployment, operation and maintenance. These skills and technical capabilities are the ideal foundation from which to offer network infrastructure management services to other network owners. The facilities leasing

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 33 and managed services offerings are collectively referred to as Managed Infrastructure Services.

Facilities Leasing

SENTECH operates approximately 330 terrestrial signal distribution sites and a satellite platform to provide signal distribution services for television and radio. Site-sharing facilities are provided to public and private telecommunications service providers for various communication services on more than 147 of SENTECH’s transmitter high sites to capitalise on the infrastructure investment.

The high-sites are situated at different locations with different heights, to satisfy customer coverage needs throughout South Africa. The network infrastructure is continually operated and maintained to ensure reliability and availability of services and long-term operations continuity.

NASREC Data Centre

SENTECH provides its customers with In-building Equipment Hosting and Storage at NASREC – one of its main sites. As part of the Facilities Management Network Growth and Diversification Strategy, hosting of in-building equipment and storage services will be offered to customers.

Managed Infrastructure Services

SENTECH aims to combine its skills, resources and services into an Infrastructure Management Services offering. The initial phase will focus on municipalities where they will be able to contract SENTECH to manage their external infrastructure, and on-sell any available capacity for customers’ terrestrial sites. This will allow customers to focus on their core business, whilst relying on a world-class network operator to manage their communication needs.

The Infrastructure Management Company for Municipalities will include various capabilities, such as conducting due-diligence to establish customer assets and liabilities and evaluate commercial potential, maintenance and support of the infrastructure and equipment, manage and sell facilities leasing of the sites as well as develop a business and financial model framework on behalf of the customers

Consultancy Services

Due to the experience accrued by SENTECH from years of running BSD services, the Company has decided to commercialise this expertise by providing knowledge-based services, focusing on planning and implementation of broadcast services. This is particularly relevant in terms of the Company’s strategy to expand business to the rest of the African continent.

6.3 Connectivity Services

SENTECH has positioned itself to play a significant role in the implementation of SA Connect and servicing government in wireless broadband services. The organisation will be involved in wireless broadband services in support of the SOC-nominated beneficiaries that will lead the broadband rollout.

Fixed Wireless Broadband

To deliver speed in internet connectivity.

VSAT

For remote and rapid deployment, we provide connectivity through the VSAT system.

34 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 Strategic Priorities

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 7. STRATEGIC PRIORITIES

7.1 Sustainability SENTECH will continue with the implementation of the ‘Six Capitals’ as defined in the Company’s Sustainability Plan. Emphasis will be placed on business expansion and new product innovation to ensure financial sustainability. Transformation as a social capital, will also receive greater attention to advance social and economic transformation of society.

As part of our growth strategy, the organisation will continue implementing its Pan African strategy to identify new markets. In addition, the organisation will pursue strategic partnerships and acquisitions to realise product diversification.

7.2 Build digital skills and capabilities The organisation will pursue innovative ways to meet its customers’ expectations and this entails building digital skills and capabilities. For SENTECH to be part of the digital convergence and innovative solutions delivery, the organisation will invest in its human capital and capabilities to enable its workforce to drive innovation.

To achieve this, the organisation will conduct a skills audit for the identification of skills gap which will be supported by planned training interventions with the focus on digital skills. An employee value proposition will be developed to foster a work environment conducive to attracting and retaining best talent.

7.3 Enhance connectivity services In the past MTEF, the organisation played a leading role in the development of the South African-based Pan- African satellite business case in support of broadband initiatives.

As an organisation, SENTECH is poised to play a significant role in the rollout of the SA Connect project and to deploy wireless broadband services in fulfilling its mandate. The organisation has invested in several refresh technologies to enhance the performance levels of its connectivity services to service its existing and future clients.

The following summarizes the strategic focus area in which SENTECH will track progress in the implementation of its Corporate Strategy:

Strategic focus area Outcome 1. Inorganic growth through acquisitions and • Business acquisitions strategic partnerships • Strategic partnerships formed and contributing to revenue 2. Build Wireless Broadband business • Internal broadband capabilities built • Market entry into fixed wireless broadband • Increase revenue and customers from Connectivity services 3. Research and Innovation • OTT service launched • Build STLs using TVWS • Technology exploration • Explore starting new innovative ventures.

Table 7: Strategic Focus Areas and Outcomes

36 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 Key Performance Areas

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 8. KEY PERFORMANCE AREAS

The Board has adopted a set of strategic objectives for the 2018–2021 MTEF planning period that will ensure that the Company achieves its public service mandate objectives, which are aligned with Shareholder priorities, and will ensure financial sustainability.

8.1 Alignment with Shareholder Priorities

SENTECH has ensured alignment of its business operations with the Shareholder Strategic Goals and Objectives for 2018–2021 planning period set out in Table 6 below:

Shareholder Strategic Goals and Objectives – MTSF 2018-2021 SENTECH Strategic Plan Strategic Goals Strategic Objectives Alignment SG 1: Broadband connectivity that SO, 1.1 Co-ordinate Broadband SENTECH to play a significant provides secure and affordable connectivity to achieve 100% role in supporting Broadband access for all citizens to education, population reach. initiatives including Internet for health and other government All. services and stimulates socio- economic development. SG 2: South Africa has a modern, SO, 2.1: Develop and implement SENTECH will ensure assess and sustainable and competitive ICT policy and legislation aimed affordable services of its products postal and telecommunications at improving access to and and services sector. affordability of ICTs. SENTECH strategy, amongst SO, 2.2: Advance South Africa’s others, is to forge strategic National ICT interests in regional partnerships and pursue and international forums international expansion especially towards attaining partnerships in the Pan-African region. for economic growth and SENTECH has developed a development. Pan-African Strategy and will collaborate with the DTPS’ International branch to implement the strategy. SG 3: An inclusive Information SO, 3.1: Develop a national SENTECH will actively engage and Society and Knowledge Economy e-Strategy that will give priority to participate with the DTPS in the driven through a comprehensive e-Government Services. development and implementation e-Strategy and access to of the e-Strategy government services. SENTECH will use its infrastructure to support its obligations in relation to the National e-Strategy. SG 4: Optimally functional SO, 4.1: Improve performance Ensure that SENTECH has the Department and SOCs that of SOCs through proactive and appropriate corporate governance effectively delivery on their stringent oversight structures and policies to enable respective mandates. SO, 4.2: Create a high performing effective shareholder oversight. organisation to enable achievement of the Department’s mandate. Table 8: Shareholder Strategic Goals and Objectives

38 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 R139 million R1,422 million 20/21 FY Allocated budget spend of 6.5% ESD and 3% NPAT spend on SED and 4.5% on Skills Expenditure Development Clean audit achieved average Weighted availability based on of revenues product 99.80% Maintain 80% customer satisfaction level 95% of planned training interventions on digital skills implemented digital products Two developed sites 6 broadband connected R132 million R1,354 million 19/20 FY Allocated budget spend of 6% ESD and NPAT spend of 2.5% on SED on and 4% Expenditure Skills Development Clean audit achieved average Weighted availability based on of revenues product 99.80% Maintain 80% customer satisfaction level 90% of planned training interventions on digital skills implemented digital products Two developed sites 6 broadband connected R125 million R1,290 million Performance Targets 18/19 FY Allocated budget spend of 5.5% ESD and NPAT spend of 2% on SED on and 3.5% Expenditure Skills Development Clean audit achieved average Weighted availability based on of revenues product 99.80% Achieve 80% customer satisfaction level 85% of planned training interventions on digital skills implemented digital products Two developed sites 4 broadband connected KPI by 8–10% Revenue growth annually interest Earnings before and tax (EBIT) (5%) spend Five percent of allocated budget on Enterprise and Supplier Development (ESD), NPAT spend 1.5% on Socio- Economic Development, and Skills Development (3%) wage expenditure Clean audit achieved average Weighted availability based on revenues product Customer satisfaction level of 80% 85% of planned training interventions on digital skills implemented digital products Two developed (Fixed Wireless and OTT platform) sites 4 broadband connected in support of internet for All Strategic Objectives sales revenue Increase Earnings Before Increase (EBIT) and Interest Tax Contribute to socio- economic transformation Achieve clean audit network availability Ensure meets SLA requirements all platforms across Enhanced customer orientation Enhance Human Capital Development Enhance innovation Support SA Connect delivery of the through Internet for All project Key Performance Indicators Strategic Goals SG 1: Sustainable Business Growth SG 2: Achieve high levels of customer satisfaction SG 3: Build digital capabilities and enhance connectivity Table 9: SENTECH MTEF 2018–2021 Key Performance Indicators Table 8.2

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 39 Quarter 4 January 2019 to 2019 March R 1290 million (Cumulative) R 125 million (Cumulative) Allocated budget spend on Enterprise Supplier Development (5%), Socio-Economic Development NPAT of (1.5%) and Skills Development wage (3%) expenditure Complete and issue Interim Financial Statements for the nine months period ending 31 December 2018 and submission of 2018/19 Quarter 3 Business Performance Information to the Executive Authority Quarter 3 October 2018 to December 2018 R 964 million (Cumulative) R 110 million (Cumulative) Achieve 75% of allocated budget for ESD, and 75% spend of (1.5%) for SED and 40% wage expenditure (3%) on Skills development Reduction of Management Letter Points by 50% Quarter 2 July 2018 to September 2018 R 637 million (Cumulative) R81 million (Cumulative) Achieve 30% of allocated budget on ESD and 40% spend of (1.5%) for SED and 40% wage expenditure (3%) on Skills development No performance required Performance Targets* Quarter 1 April 2018 to June 2018 R 315 million R37 million Socio-Economic and Enterprise Development (SEED) programme implementation plan approved by EXCO and implementation started No performance required Annual Target R1,290 million R125 million Five percent (5%) spend of allocated budget on Enterprise and Supplier Development (ESD), NPAT spend of 1.5% on Socio-Economic Development, and Skills Development wage expenditure (3%) Clean audit achieved

KPIs sales Increase by growth revenue 8–10% annually Earnings Increase and Tax Before (EBIT) Interest R125 million Five percent (5%) spend of allocated budget on Enterprise and Supplier Development (ESD), NPAT spend 1.5% on Socio-Economic Development, and Skills Development wage expenditure (3%) Clean audit achieved Strategic Objectives sales Increase revenue Earnings Increase and Tax Before (EBIT) Interest Contribution to socio-economic transformation Achieve clean audit Annual Performance Targets Strategic Goals SG 1: Sustainable business growth 8.3

40 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 Quarter 4 January 2019 to 2019 March R 1290 million (Cumulative) R 125 million (Cumulative) Allocated budget spend on Enterprise Supplier Development (5%), Socio-Economic Development NPAT of (1.5%) and Skills Development wage (3%) expenditure Complete and issue Interim Financial Statements for the nine months period ending 31 December 2018 and submission of 2018/19 Quarter 3 Business Performance Information to the Executive Authority Quarter 4 January 2019 to 2019 March average Weighted availability based on product of 99.80% revenues Achieve customer satisfaction levels of 80% based on the survey completed 85% of planned training interventions on digital skills implemented (cumulative) 2 digital products developed 4 Internet for All sites broadband connected (cumulative) Quarter 3 October 2018 to December 2018 R 964 million (Cumulative) R 110 million (Cumulative) Achieve 75% of allocated budget for ESD, and 75% spend of (1.5%) for SED and 40% wage expenditure (3%) on Skills development Reduction of Management Letter Points by 50% Quarter 3 October 2018 to December 2018 average Weighted availability based on product of 99.80% revenues Implement 80% of the corrective measures 63% of planned training interventions on digital skills implemented (cumulative) Conduct product demonstrations to customers targeted 2 Internet for All sites broadband connected (cumulative) Quarter 2 July 2018 to September 2018 R 637 million (Cumulative) R81 million (Cumulative) Achieve 30% of allocated budget on ESD and 40% spend of (1.5%) for SED and 40% wage expenditure (3%) on Skills development No performance required Quarter 2 July 2018 to September 2018 average Weighted availability based on product of 99.80% revenues Implement 40% of the corrective measures 45% of planned training interventions on digital skills implemented (cumulative) Develop a Business Model and Business Plan for by Exco approval 1 Internet for All site broadband connected Performance Targets* Quarter 1 April 2018 to June 2018 R 315 million R37 million Socio-Economic and Enterprise Development (SEED) programme implementation plan approved by EXCO and implementation started No performance required Performance Targets* Quarter 1 April 2018 to June 2018 average Weighted availability based on product of 99.80% revenues Customer Satisfaction Survey Monitoring Tool Developed and by EXCO Approved 20% of planned training interventions on digital skills implemented Business requirements, specifications and plans product for two digital Fixed products: Wireless and OTT platforms approved by Exco Plan and Project of all procurement resources required finalised Annual Target R1,290 million R125 million Five percent (5%) spend of allocated budget on Enterprise and Supplier Development (ESD), NPAT spend of 1.5% on Socio-Economic Development, and Skills Development wage expenditure (3%) Clean audit achieved Annual Target average Weighted availability based on product of revenues 99.80% Achieve 80% customer satisfaction level 85% of planned training interventions on digital skills implemented 2 digital products developed sites 4 broadband connected

KPIs sales Increase by growth revenue 8–10% annually Earnings Increase and Tax Before (EBIT) Interest R125 million Five percent (5%) spend of allocated budget on Enterprise and Supplier Development (ESD), NPAT spend 1.5% on Socio-Economic Development, and Skills Development wage expenditure (3%) Clean audit achieved KPIs average Weighted availability based on product revenues Customer satisfaction level of 80% 85% of planned training interventions on digital skills implemented digital Two products developed (Fixed and OTT wireless platforms) sites 4 broadband connected in support of internet for All Strategic Objectives sales Increase revenue Earnings Increase and Tax Before (EBIT) Interest Contribution to socio-economic transformation Achieve clean audit Strategic Objectives network Ensure availability meets SLA requirements all platforms across Enhanced customer orientation Enhance Human Capital Development Enhance Innovation Support SA Connect delivery of through the Internet for All project Annual Performance Targets Strategic Goals SG 1: Sustainable business growth Strategic Goals SG 2: Achieve high levels of customer satisfaction SG 3: Build digital capabilities and enhance connectivity Table 10: 2018–2019 Annual Performance Targets Table 8.3

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 41 Financial Plan

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 9. FINANCIAL PLAN

This financial plan provides insight onto the investment and financing decisions made by SENTECH in building a financially sustainable company within the framework of the overall financial strategy. Significant efforts are being made to streamline business processes, create an agile organisation and implement initiatives that positively drive shareholder’s value.

9.1 Executive summary Overall, SENTECH (broadcasting) and the entire ICT sector face significant financial sustainability challenges. This is within the context of a weak local economy that is hamstrung by the recent rating downgrades of the country by the major rating agencies to sub investment grades. The company is necessitated to embark on initiatives that will improve and preserve the available cash resources as well as scrutinize opportunities that offer growth in terms of service offering and geographical spread.

The table below provides a high-level synopsis of the financial state of the company, with a glaring picture of stagnant growth in revenues from the core service offerings (television, radio and multimedia content services). The normalised EBIT remains flat due to the continued prioritisation of initiatives that are necessary to ready SENTECH for the digital future whilst revenues are constrained in the short term. Dual illumination is expected to continue during the MTEF period as SENTECH will be running the DTT and analogue networks simultaneously, whilst the funding allocation is not allocated for the two outer years.

The lack of dual illumination funding in the outer years will result in the shortfall for the business which will lead to a total operating loss being reported by the 2020/21 financial year. SENTECH has received dual-illumination grant funding over the years from government and will continue to engage the relevant stakeholders towards securing the necessary funding for the period that has not yet been allocated the necessary budget.

Figure 17 SENTECH’s Financial Projections (2019-2021)

The company will continuously review the impact of the economic constraints on growth opportunities, risks associated with lack of funding of dual illumination and the overall impact on the available cash and long-term financial sustainability of SENTECH.

9.2 Comprehensive Income Statement The table below depicts the statement of profit or loss. SENTECH is projecting revenue of R1, 289 billion and total operating expenditure of R1,164 billion from continuing operations for the 2018/19 financial year. The movement equates to a year-on-year increase of 6% and 10%, when compared to the 2017/18 forecast for both revenue and operating expenses, respectively.

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 43 Government has allocated R203 million in FY2019 for Dual illumination incremental costs attributable to running two parallel networks. The non-funding of dual illumination in the FY2020 and FY2021 contributes significantly to the marginal decrease in profitability. Government has funded most of the dual illumination incremental costs in the past and engagements are ongoing in order to deal with the shortfall.

FY2017 FY2018 FY2019 FY2020 FY2021 FY2018 vs FY2019 Actual Forecast Budget Budget Budget Variance For the year ended R’000 R’000 R’000 R’000 R’000 R’000 % Revenue 1 142 1 216 1 289 1 354 1 421 72 845 6% 813 780 625 107 812 Cost of Sales (998 450) (977 577) (1 086 (1 141 (1 198 109 261 11,2% 838) 180) 239) Gross Profit 144 363 239 203 202 787 212 926 223 573 (36 416) (15,2%)

Operating Expenses (118 020) (125 366) (146 280) (152 852) (160 494) 20 915 16,7% Selling expenses (17 672) (21 943) (15 570) (16 348) (17 166) (6 373) (29,0%) Administrative expenses (64 522) (66 302) (74 884) (78 628) (82 560) 8 582 12,9% Dual Illumination costs 138 299 133 061 159 415 167 386 175 755 (26 354) 19,8% Normalised Operating 82 448 158 653 125 468 132 484 139 108 (33 185) (20,9%) Profit

EBIT Margin 7,2% 13,0% 9,7% 9,8% 9,8% Dual Illumination 89 806 133 061 159 415 54 892 – (26 354) 19,8% Revenue Dual Illumination costs (138 299) (133 061) (159 415) (167 386) (175 755) 26 354 19,8% Dual Illumination Deficit (48 493) – – (112 494) (175 755) – – Operating Profit 33 955 158 653 125 468 19 990 (36 647) (33 185) (20,9%)

3,0% 13,0% 9,7% 1,5% (2,6%) Finance income 64 415 60 566 24 191 19 196 15 814 (36 375) (38,7%) Finance costs (4 207) (138) (105) (111) (116) (33) (23,7%)

Profit Before Taxation 94 163 219 081 149 553 39 076 (20 949) (69 593) (31,8%)

Taxation (9 990) (61 343) (41 875) (10 941) 5 866 (19 468) (31,7%)

Profit or (Loss) for the 84 173 157 738 107 678 28 135 (15 084) (50 060) (31,7%) year

Table 11: Detailed Statement of Comprehensive Income

9.3 Revenue

The projected 2018/19 financial year revenues are based on the analysis of the market environment and estimated earnings to be derived from growth opportunities by customers. Estimates for the 2019/20 and 2020/21 financial years are based on the projected 2018/19 figures, increased by the October 2017 CPI of 4,8%.

Content and Multimedia Services Terrestrial broadcasting services include both digital and analogue network services and are divided between television and radio. Overall projected revenue for this service for the 2018/19 financial year is R1,2 billion, which is 6,3% above the 2017/18 financial year forecast of R1,1 billion. The variance of 6,3% is mainly attributable to the CPI adjustments and modest growth in new business within television services. The traditional television, radio

44 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 and digital media services remain the core competence of SENTECH and they are projected to remain stable without attractive growth in the medium term as the transformation in the industry unfolds.

Infrastructure Management Services The facility leasing revenue projection for the 2018/19 financial year is R71 million which is consistent with the 2017/18 forecast reflecting the level of saturation in the market and minimum growth opportunities.

Connectivity Services The company has invested resources in refocusing the connectivity business which has presented new opportunities for SENTECH to offer competitive offering to the market. There is no growth budgeted in this service because of the uncertainties and long lead times on business development. Revenue is budgeted at R7 million for the 2018/19 financial year.

Operating Expenditure Expenditure for FY2019 is projected to be R1.323m, an increase of R132m from the FY2018 forecast. In line with the cost containment plan, MTEF expenditure growth over the MTEF are largely CPI based, except for specific items with contractual obligations. The major line items driving operating expenses are detailed below.

Personnel Costs Personnel Costs (R432m) are for personnel remuneration; which include basic salaries, pension & medical fund contributions, housing subsidy, shift & climbing allowances and other personnel costs; such as recruitment costs, skills development levy, bursaries and courses.

Satellite Capacity Satellite capacity costs (R333m) are for transponder capacity used for distribution and linking of the current analogue and future digital terrestrial broadcasting services; and for the DTH-S open access platform service. Satellite capacity costs are projected to primarily be driven by exchange rate variations.

Energy Energy Costs (R140m) are in respect of electricity, diesel & oil for generators. In the 2018/19 financial year, costs increases were mainly driven by the electricity suppliers’ annual tariff increase as approved by the energy regulator.

Depreciation The depreciation charge of R117 million is regarding the normal depreciation on assets in use and a provision for depreciation on new capital expenditure for product and projects expansion inclusive of provision for work- in-progress.

Preventative Maintenance Preventative maintenance costs (R32m) are to support network continuity to enable delivery of broadcasting signal distribution services. The costs are meant for rehabilitating and maintaining the network for improved network performance.

Corrective Maintenance The corrective maintenance costs (R46m) are to perform work necessary to address potential weakness that can impact on the organization’s overall efficiency and effectiveness and infrastructure preservation.

Travel and Subsistence Travel and subsistence costs (R33m) have been subjected to an internal cost containment measures in line with the National Treasury instruction.

Computer Services Computer services (R20m) is in respect of annual software and maintenance licences for IT servers and computer network, including other system development technical upgrades project implementation.

Professional and Consulting Charges Professional and consulting charges are budgeted at R51m to accommodate the initiatives necessary for long- term growth and sustainability. In addition to internal and external audit related fees, and directors’ emoluments. Funds have been budgeted to address initiatives that are aimed at improving processes through automation, development of applications, skills audit, culture change, commercialisation of new services through marketing and those that are shareholder driven (internet for all, mergers and acquisitions and continued investment in enterprise and supplier development).

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 45 Earnings before Interest and Tax (EBIT) SENTECH is budgeting to achieve R125 million in earnings before tax for the FY2019 financial year, resulting in a 21% (R33m) decrease on the forecasted FY2018. The projected decrease in earnings is impacted mainly by operating expenditure CPI price increases, the impact of foreign exchange fluctuations impact on satellite rental, energy and focused investment in maintenance.

Earnings after Tax SENTECH is budgeting to achieve R108 million in earnings after tax for the 2018/19 financial year. The projected decrease in earnings is impacted mainly by the lack of sizeable growth on the core business whilst there is a continued necessity to further invest in costs to ensure the company remains relevant in delivering quality services to customers, this is described in detail above.

9.4 Statement of Financial Position

2021 2020 2019 2018F 2017 R’000 R’000 R’000 R’000 R’000 ASSETS Non-Current Assets Property, Plant & Equipment 978 514 958 307 941 365 925 740 946 509 978 514 958 307 941 365 925 740 946 509

Current Assets Inventories 46 028 54 151 58 842 75 607 80 301 Tax – – – – 18 138 Trade and other receivables 162 976 149 824 119 521 446 965 43 131 Cash and cash equivalents 966 860 1 059 022 1 170 706 758 917 907 357 1 175 864 1 262 997 1 349 069 1 281 489 1 048 927

Total Assets 2 154 378 2 221 304 2 290 434 2 207 229 1 995 436

EQUITY Share capital 75 892 75 892 75 892 75 892 75 892 Reserves 667 868 667 868 667 868 667 868 667 868 Accumulated profit 1 233 015 1 299 941 1 314 125 1 206 433 1 023 712

1 976 775 2 043 701 2 057 885 1 950 193 1 767 472 LIABILITIES Non-current liabilities Employee Benefits 14 735 14 735 14 735 14 735 14 060 Deferred Tax 40 577 40 577 40 577 40 577 40 577

55 312 55 312 55 312 55 312 54 637 Current liabilities Trade and other payables 118 307 118 306 118 305 118 307 132 011 Deferred income – – 54 948 78 334 10 216

46 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 2021 2020 2019 2018F 2017 R’000 R’000 R’000 R’000 R’000 Provisions 3 984 3 984 3 984 5 084 31 100

122 291 122 290 177 237 201 725 173 326 Total liabilities 177 603 177 602 232 549 257 037 227 963 Total Equity and Liabilities 2 154 378 2 221 304 2 290 434 2 207 229 1 995 436

Table 12: Statement of Financial Position

Notes: • Deferred income (government grants) is depleting in line with completion of the government funded projects i.e. DTT and disaster recovery, thus clearing the cash balance; and • Property, plant and equipment will increase during the MTEF period as part of the programme to stabilise the network, and investment in technology and infrastructure to improve efficiencies and to meet internal requirements.

9.5 Cash Flow Statement

FY2021 FY2020 FY2019 FY2018 2017 R’000 R’000 R’000 R’000 R’000 CASH FLOW FROM OPERATING ACTIVITIES Cash generated from operations 88 116 63 101 426 888 (313 257) 92 486 Interest received 8 706 12 427 17 743 35 487 45 310 Dividends received 7 129 6 789 6 466 12 932 19 104 Interest paid (116) (111) (105) (100) (250) Tax Paid (45 997) (43 890) (41 880) (6 112) (23 168)

Net cash from operating activities 57 838 38 316 409 112 (271 050) 133 482 CASH FLOW FROM INVESTING ACTIVITIES Property, Plant & Equipment (216 845) (213 360) (175 393) (94 931) (274 615) Net cash from investing activities (216 845) (213 360) (175 393) (94 931) (274 615)

CASH FLOW FROM FINANCING ACTIVITIES GRANT received 66 845 63 360 178 070 215 789 87 719 Interest on government grant – – – 1 751 3 529

Net cash from financing activities 66 845 63 360 178 070 217 540 91 248

Total cash movement for the year (92 162) (111 684) 411 789 (148 441) (49 885) Cash at the beginning of the year 1 059 022 1 170 706 758 917 907 357 957 242

Cash at the end of the year 966 860 1 059 022 1 170 706 758 917 907 357

Table 13: Cash Flow Statement

Notes: • The cash from operating activities is forecasted to decline in the FY2018 due to non-payment by a major customer, however, in FY2019 the operations will realise better cash flows as this customer catches-up with payment of the outstanding debt.

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 47 9.6 Capital Expenditure Plan SENTECH operates infrastructure that offers signal distribution services to most of the country’s licensed broadcasters which include the Public Broadcaster, Commercial and Community Broadcasters. Facilities leasing is also offered to operators looking for the best geographic operations that offer broad signal coverage.

To ensure service delivery the Company maintains and expand service offerings infrastructure from resources generated from operations. The FY2019 MTEF Capital Expenditure budget is aimed at ensuring continued service offering and expending the infrastructure for any new business opportunities. The budgeted capital will deplete the available cash resources, with the intention of earning future cash flows.

Source of funding 2018/19 2019/20 2020/21 (R’ mil) (R’ mil) (R’ mil) Internal funds R150,00 R150,00 R150,00 External funds R28,07 R63,36 R66,85

Total R178,07 R213,36 R216,85

Table 14: Capital Expenditure Budget

The budgeted capital expenditure has the following main objectives:

• Increase the scope of operations and, thus, improve the base of profitable revenues; • Improve internal efficiencies; and • Transform business capabilities.

9.7 Borrowing Plans SENTECH’s financial strategy highlights the appropriateness of a suitable capital structure that incorporates a reasonable amount of borrowing, without placing a significant burden on the financial performance of the Company. The Company will put in place facilities for short-term borrowings, during the 2019 – 2021 MTEF period, in case the financing requirements go beyond the capacity of internally-generated resources.

Long-term borrowing will be considered for significant investment needs that are supported by attractive business investment opportunities that are aligned to the long-term strategy of the company. In consultation with the Shareholder and National Treasury a borrowing facility and debt management plan will be developed in accordance within the guidelines and objectives for financing as prescribed by National Treasury and Shareholder financial governance rules and regulations.

48 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 ANNEXURE A: Governance Structures

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 ANNEXURE A: GOVERNANCE STRUCTURES

1. Overview SENTECH has built sound corporate governance structures and processes in compliance with the SENTECH Act, the PFMA and Treasury Regulations, the Companies Act, the Memorandum of Incorporation (MOI) and the Government Protocol on Corporate Governance, which are reviewed annually in line with changes in the regulatory and business environment. These structures and processes ensure SENTECH achieves its strategic objectives. SENTECH’s corporate governance structures and processes have, by and large, been aligned with the King Report on Governance for South Africa, 2016 (King IV) , and this is an ongoing process. The governance structure is integrated with the strategy and are at the centre of everything we do.

2. Ownership SENTECH is a public entity that is wholly owned by the Government of South Africa. In terms of the PFMA, SENTECH is classified as a Schedule 3B National Public Enterprise, reporting to the Minister of Telecommunications and Postal Services. The Minister, who is the Shareholder Representative on behalf of the State, is SENTECH’s Executive Authority.

3. ROLE AND COMPOSITION OF THE BOARD 3.1 Role of the Board The Board is responsible for effectively leading, controlling and managing SENTECH’s business, subject to the provisions of the SENTECH Act, the Shareholder’s Compact, the Companies Act, the PFMA and other applicable legislations. The Board is responsible for the overall leadership, transparency and performance of SENTECH.

The Board operates under an approved charter that provides a concise overview of the role, powers, functions, duties and responsibilities of the directors, both collectively and individually, and ensures that financial and risk management, and internal controls are effective.

The Board has determined that, based on the MOI, Shareholder’s Compact and applicable legislation, its main functions and responsibilities are to give strategic direction to the Company, in line with government’s objectives, and ensure that SENTECH remains a sustainable and viable business. The Board monitors and evaluates the implementation of the Company’s strategy and achievement of performance objectives by executive management, as set out in the Corporate Plan and Shareholder’s Compact. The Board ensures that the Company is managed effectively, in accordance with corporate governance best practice and the highest ethical standards.

3.2 Structure of the Board In terms of the SENTECH Amendment Act, the Board shall consist of three executive directors and at least four non-executive directors. The three executive directors are the persons performing the functions of Chief Executive Officer, Chief Operations Officer and Chief Financial Officer. The non executive directors are appointed by the Minitser. The Minister, on recommendation by the Board, confirm the appointment of the executive directors.

Board Committees The Board has four sub-committees, namely:

Audit & Risk Committee Social & Ethics Committee

Human Resources, Nominations & Remuneration Technology, Policy & Regulatory Coordination Committee Committee

All committees have adopted charters that are reviewed annually and as and when necessary to ensure that they continue to be relevant and comply with applicable legislation, regulations and best practice on corporate governance.

The King IV philosophy, which focuses on sustainable development, integrated thinking, corporate citizenship,

50 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 stakeholder inclusivity and the Company’s role and responsibility in society, has been incorporated in the charters. An outcomes-based rather than rules-based approach has been adopted. The Board has focused on opportunity management in addition to risk management.

Audit and Risk Committee The Audit and Risk Committee (ARC) is constituted in terms of sections 51(1)(a)(ii), 76 and 77 of the PFMA read together with Treasury Regulation 27 and section 94 (7) of the Companies Act. The Committee has adopted its charter, in compliance with the aforementioned, which outlines its role and responsibilities. The ARC plays an essential role in ensuring the integrity and transparency of corporate reporting, pays attention to the key accounting issues and key audit matters, and ensures proactive risk management, including an open avenue of communication between Management, Internal Auditors, External Auditors and the Board. The Committee oversees, among others, integrated planning and reporting, internal and external audit plans and reports.

The Committee recommends the Company’s Risk Management Plan and Framework, Fraud Prevention Plan, Combined Assurance Policy, and Risk Appetite and Tolerate Levels Policy to the Board for approval. The Committee reviews the risks relating to SENTECH’s business after consideration of the risks by the relevant Board Committees. It reviews the adequacy and effectiveness of risk management, and ensures that risks are reviewed on an annual basis.

Social and Ethics Committee This Committee fulfils the obligations of the Company with respect to section 72 (4) of the Companies Act. The purpose of the Committee is to oversee the sustainability of SENTECH. The Committee has adopted its charter in compliance with the Act, which outlines its role and responsibilities.

The Committee focuses on social and ethical issues that are critical for the Company’s sustainability and management of material issues. ‘Material issues’ pertains to statutory obligations, risks, stakeholder issues and key performance indicators.

The Committee exercises oversight over SENTECH’s reputation management, transformation and stakeholder relationships with specific reference to compliance with relevant legislation and generally accepted codes of corporate governance. The Committee places emphasis on relationships with employees, customers, suppliers, local communities, and government.

Human Resources, Nominations and Remunerations Committee This Committee ensures that the Board and its Committees are properly resourced to enable them to fulfil their responsibilities. The Committee assists the Board on matters of strategic remuneration by ensuring that decisions are aligned to the Company’s strategic objectives.

The Committee oversees the human resources strategy and plan aimed at creating and sustaining technical and managerial excellence, talent retention and succession management. The Committee oversees the performance of the executive directors and company secretary, and considers procedures for the Committee to oversee the evaluation of the performance of the Board and each director, including an assessment of each director. The Committee has adopted its charter which articulates its roles and responsibilities.

Technology, Policy and Regulatory Co-ordination Committee This Committee ensures co-ordination between policy, regulation and technology in the development and implementation of the Company’s overall strategy. The Committee oversees the development of the technology and information, and regulatory strategies, and ensures compliance with technology regulatory legislation, policies and/or requirements. In this regard, the Committee ensures strategic scanning of technology trends and developments within the technology and information industry are carried out regularly, and that the strategies are aligned to good corporate governance and the corporate strategy.

The Committee also assists the Board in overseeing strategic projects, commercial activities, capital investments and transformation of suppliers.

4. Executive Committee (EXCO) EXCO is constituted in terms of the SENTECH Act and the Memorandum of Incorporation which provide that the day-to-day affairs of the Company shall be managed by an Executive Committee, which consists of the executive directors of the Board As mentioned above.

The CEO chairs the EXCO and executive management attend EXCO meetings by invitation.

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 51 Nationality SA SA SA SA SA SA SA SA Experience Over 20 years’ experience Over 25 years’ experience Over 20 years’ experience Over 25 years’ experience Over 20 years’ professional and commercial experience Over 25 years’ experience Over 20 years’ experience Over 30 years’ experience Industry Experience Yes Yes Yes Yes Yes Yes Yes Yes Date of Appointment 1 Mar 2015 13 Oct 2015 2018 1 March 1 November 2013 (initial appointment) 12 Dec 2016 (reappointment) 1 November 2013 (initial appointment) 12 Dec 2016 (reappointment) 1 Mar 2015 1 Dec 2016 12 Dec 2016 Technical Experience Technical energy, renewable ICT, finance, business development ICT Management Project and Engineering Law: mining banking, corporate, commercial, telecommunications and housing policy development finance, Project, & risk treasury management, Financial management, auditing, strategy development and implementation Finance, policy- making and regulation, communication, media ICT and broadcasting, Executive Finance Treasury Risk Management, Strategy Human Resources Strategy, Transformation Qualifications MSc, BSc Electrical Engineering MSc Electrical Engineering Electrical BTech, Engineering, Project Management LLB, BProc CA (SA), MAP (WBS), EDP (Stellenbosch Business School), International Certificate in Treasury Management (ACT, UK) BSc (Chem and Physio), PG Dip in and Info. Telecoms Policy CA (SA) Post Graduate Diploma in Accounting, BCompt (Honours), BCom (Accounting) BA, Higher Diploma in Personnel Management, MA in Manpower Studies Gender Male Male Male Female Female Male Male Female Race Black Black Black Black Black Black Black Black Age 49 54 43 55 46 50 42 59 Position Chairperson Chief Executive Officer Chief Operations Officer Non-executive Director Non-executive Director Non-executive Director Chief Financial Officer Non-executive Director Name Mr M Mello Mr M Booi Mr T Leshope Ms J Huntley Ms N Mbele Mr L Mtimde Mr S Mthethwa Ms LM Ndlovu Director’s Information Director’s

52 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 ANNEXURE B: Risk Management Plan

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 ANNEXURE B: RISK MANAGEMENT PLAN

Risk Management is an integral part of the organisation’s objectives. It is the responsibility of the Board to ensure that there is effective and efficient risk management in the organisation and that its methodologies are embedded within strategy setting, planning and business processes to safeguard performance and sustainability.

The Board has delegated the task of monitoring the risk management process to the Audit and Risk Committee and EXCO is responsible for ensuring that all significant risks facing the Company are managed in accordance with the Risk Management Policy and Framework.

The strategic risks have been assessed and the top five risks are highlighted on the diagram below and the full strategic risks for the 2018-2021 are on the table below:

Critical Major Moderate Insignificant Negligible Rare Unlikely likely Common Almost Certain

No. Risk Description R1 Inability to sell current products R2 Lack of capacity to develop products to take to the market R3 Ageing infrastructure R4 Unavailability of energy R5 Cyber attacks R6 Community unrest R7 Stagnant and Non-performing platforms

54 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 with establish to dealing on Structure Team Governance Control Improvements Control and services developed New products to customer requirements according Defined strategic partners for marketing and offering distribution of SENTECH’s Optimisation of the Marketing and Sales structure Appointment of Marketing agencies to execute on the Marketing Plan Continuous training and development of customer facing employee stakeholders Lobby relevant International Brand positioning and Mergers implement and Develop Acquisitions Policy further into streams Diversify revenues potential (connectivity withbetter growth Services) and Managed Infrastructure dependency on few major to reduce customers Renegotiate suppliers’ contracts to local partners with more introduce based arrangements that invoices are theof Training (ZAR). currency local in Treasury/Finance and mitigating strategies FOREX exposure applicable to a company of SENTECH’s size

fit market for assessed regularly Risk Mitigations Implementation of market strategies development Product Products benchmarking through Business Development competencies Lobbying and consultation with the DTPS, DoC and ICASA Partnership and alliance strategy Engagement with International Relations Focused international business resource contracts as part of standard Forward dominated currency practice on foreign the risk of unfavourable supplies to control Continuous monitoring exchange volatility. exchange movements to ensure of foreign made at suppliers are payments of foreign most favourable rates strategies Cost reduction the of amount significant a as Contributing factors Entrance of disruptive technologies and new competing players in the market market insight and Lack of customer, in self innovation which may result potentialexistingand by provisioning customers Inadequate business development skills Regulatory framework (availability of frequencies) life cycle Inability to manage the product Lack of visibility in the market Legislation and regulations Competition Political and cultural risks framework regulatory Inter-governmental that may enable entrance into new public markets sector private not and markets sector exchange rates to foreign Exposure fluctuations operational and capital costs are Company’s and credit currencies in foreign denominated downgrades by rating agencies costs of operations (e.g. energy, Increased Satellite transponder leasing, etc.) Delayed ASO which has an impact in dual illumination and technology obsolescence Risk Description Inability to sell current products Barriers to entry into new markets Financial Sustainability Objectives Revenue growth Revenue growth EBIT Increase Revenue Growth and Growth Sustainability Risk Category

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 55 a products develop the of and out skills rolling on plan required Control Improvements Control Continue engagements with the and the National Treasury Shareholder theand continuousASO regarding funding for dual illumination Stakeholder engagements on the of Community Broadcasters. affordability strategies and Develop turnaround exit strategies for non-performing product platforms or products withExtensive engagements the customer Lobby the DOC Develop and implement ASO plan including the communication and plan awareness Form partnerships to enhance the skills and develop new products Define plan resource plan Implement the resource to Develop and implement a clear three five-year and capabilities

and services products, of Risk Mitigations Diversification customers and other of theEngagement Shareholder stakeholders debt and processes Management Credit management performance monitoring Product Engagements with the broadcasters, DTT PMO, Bilateral with the Minister and development Research Partnership with market leaders Upskilling of internal staff Development and implementation of an operating model Partnership with market leaders Upskilling of internal staff Development and implementation of an operating model financial SENTECH’s the Contributing factors Revenue concentration on one customer threatens sustainability should the customer not be able to pay for services rendered. on the processes Delays in regulatory migration of STLs to another band and potential spectrum fees to pay Inability of Community Broadcasters SENTECH. Stagnant and non-performing platforms or products to reduce The insistence of broadcasters number of overall DTT costs by reducing sites (other networks) terrestrial skills and capacity for new Lack of relevant development product of skillstheLack in inadequate market and internal capacity development for product Lack of roadmap life cycle (structural focus) Lack of dedicated resources Risk Description Financial Sustainability Reduction in usage of DTT network Lack of capability to develop new products to take market Inadequate skills on new technologies Lack of structural focus Objectives EBIT Increase Network availability of 99.80% Revenue growth Launch 2 new products Launch 2 new products Revenue Revenue Growth and Growth and Growth Sustainability Sustainability Risk Category Human Capital

56 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021

Control Improvements Control plan and Develop a focussed project weekly report Develop and implement an organisational training plan to build digital capabilities and Conduct skills audit to identify current to enhance and build skill required future digital skills structure Develop clear work breakdown project dedicatedcontract Employ a manager Develop and implement a comprehensive ASO plan to spearhead migration process Continued implementation of technology plan replacement Continued lobbying of the DOC and participation in DTT PMO plan Implement the STG replacement Design and deploy solar technology where possible Implementationthesecurity of physical strategy Engagement with some communities and traditional leaders prior to Security scan in all areas deployment of infrastructure

Risk Mitigations Stakeholder engagement Management Project Collaborations and partnerships with higher learning institutions implementation of training Effective performance monitoring through and job Review of competency directory profiles Partnership with market leaders Stakeholder engagement SENTECH has deployed a national DTT analogue infrastructure network to replace plans Solution replacement FM, MW in place for ATV, are Programmes and VSAT Standby power plants deployed at critical sites infrastructure physical security strategy that is Approved linked with cyber security strategy in place Engagement with some communities Cyber security strategy in place and capacity (external resources Contributing factors parties to implement Dependency on third Insufficient funds) to implement training interventions employees to Lack of commitment from attend training Implementation of training interventions that may not build and enhance digital capabilities Inadequate funds to implement the project parties to implement Dependency on third Partnership failure changes to due schedule Potentialin changes in the political environment (scope creep) Change in requirements Lack of integrated plan with all stakeholders network switch- Delayed Analogue Television and technology obsolescence off Power supply interruptions due to ESKOM system failures of sites Remote areas Deterioration of socio-economic status on operations) (crime-effect Risk Description Insufficient to resources implement Unavailability of service and providers employees Inadequate analysis of skills needed to Failure execute on the project Ageing infrastructure Unavailability of reliable to energy run efficient operations Theft and vandalisation of equipment at sites Objectives Rollout sites broadband Training intervention on digital products Training intervention on digital products Connected Sites Network availability of 99.80% Network availability of 99.80% Network availability of 99.80% Infrastructure Infrastructure Risk Category Human Capital

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 57

Control Improvements Control Engagement with some communities and traditional leaders. Develop a community stakeholder management plan and implement it. Employment of local people where feasible. security Implementationtheof cyber strategy theclosely monitor to SENTECH appropriately developments and respond of the Merger following Cabinet approval of SENTECH and BBI to form a National Network company Broadband an inclusive internal team Create tasked with managing the merger and draft analyse, report Research, submission on the National Broadband Network Framework once it is gazetted for public comments stakeholders relevant Lobby for deployment of SENTECH to be ready digital radio should the policy be gazetted broadcasting sound a of finalisation Risk Mitigations Engagement with some communities Government Relations through Cyber security strategy SENTECH is part of the SOC rationalisation Steercom Position paper on the merger SENTECH is monitoring developments around policy

Contributing factors Deterioration of socio-economic status on operations) (crime-effect Pervasiveness of IP-based technologies Pervasiveness of IP-based networks in cyber-attacks Increase unauthorisedintended of probability High ease of access to SENTECH sites Lack of video monitoring SENTECH sites between BBI and process The merging SENTECH Policy development processes Risk Description Community unrests Cyber attacks Uncertainty in the SOC rationalisation process Delay in policy for the broadcasting environment Objectives Network availability of 99.80% Network availability of 99.80% Revenue growth Revenue growth Legal and Regulatory Infrastructure Risk Category

58 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021

Control Improvements Control Amend SCM policy to support absorption of ESD beneficiaries Lobby the ICT Sector Code Council for favourable requirements the internal B-BBEE Forum Strengthen and SEED unit to monitor implementation of B-BBEE initiatives costing and pricing Review all product model Development and implementation of the Stakeholder Engagement Matrix Implement SENTECH’S communications strategy

Risk Mitigations SCM processes Budget allocation and monitoring of B-BBEE implementation programmes Services (MIS) Managed Infrastructure review tariff model DTH prepaid Customer engagement process Development of the Customer Monitoring Tool Contributing factors Impact of the amended ICT codes and processes SCM regulations Current not supporting all ESD activities (SENTECH in ESD suppliers do not have preference processes) procurement may not be The changes on the requirements easily and quickly implementable Economic slowdown in high prices High input costs resulting passed on to the customer Lack of innovation and insight times Slow turnaround (communication and Lack of professionalism customer service) and internal collaboration Poor service delivery (including labour walkouts) Risk Description Lack of process to utilise the ESD beneficiaries in Supply Chain Changes in B-BBEE regulatory requirements Customer may not the afford and product services to Failure meet SLA requirements Objectives Socio-economic transformation Socio-economic transformation Revenue growth Customer satisfaction levels of 80% Legal and Customer Regulatory Risk Category

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 59 ANNEXURE C: Fraud Prevention Plan

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 ANNEXURE C: FRAUD PREVENTION PLAN

1. Introduction Fraud is an unethical practice that remains one of the biggest challenges facing the South African public sector. It is a potential threat to sustainable service delivery and growth of public entities. As a result, fraud risk governance has become recognised as a key component of good corporate governance. It is thus good business practice to implement anti-fraud and anti-corruption measures. The anti-fraud and corruption measures are mainly successful in an ethical environment. There are many advantages of working in an ethical environment free of fraud and corruption that includes enhanced staff morale, job satisfaction, ability to meet commitments and improved profitability.

SENTECH, as a public entity, has been mandated by the National Treasury through Treasury Regulation 27.2.1 to develop and implement a Fraud Prevention Plan as part of the entity’s enterprise risk management strategy. As such, SENTECH developed a Fraud Prevention Plan that is summarised below. This plan is one of the key instruments to ensure that there is a proactive approach towards minimising risks that can adversely impact SENTECH business operations.

2. Definition of terms All terms used are defined in the fraud prevention policy.

3. Legislative framework In addition to the legislated requirement for a Fraud Prevention Plan, the following three specific pieces of legislation also govern aspects of fraud and corruption for South African entities.

3.1 Section 34 of the Prevention and Combating of Corruption Activities (PRECCA), Act 12 of 2004, obliges people who hold positions of authority to report any offence of theft, fraud, extortion, forgery or uttering a forged document, involving an amount of R100 000 or more, to any police official. 3.2 The Protected Disclosure Act (PDA) was enacted to protect employees who make protected disclosure, which is defined by the act as any disclosure of information regarding any conduct of an employer, or an employee of that employer, made by any employee who has reason to believe that the information concerned shows or tends to show one or more of the following:

a) that a criminal offence has been committed, is being committed or is likely to be committed b) that a person has failed, is failing or is likely to fail to comply with any legal obligation to which that person is subject c) that a miscarriage of justice has occurred, is occurring or is likely to occur d) that the health or safety of an individual has been, is being or is likely to be endangered e) that the environment has been, is being or is likely to be damaged f) unfair discrimination as contemplated in the Promotion of Equality and Prevention of Unfair Discrimination Act, 2000 (Act No. 4 of 2000) or g) that any matter referred to in paragraphs (a) to (f) has been, is being or is likely to be deliberately concealed.

3.3 Protection of Personal Information (POPI) Act 2013

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 61 4. Policy Stance and Strategic Approach 4.1 SENTECH assumes a zero-tolerance stance against all forms of fraudulent and corrupt activities and is committed to discouraging and preventing such behaviour in the performance of its business operations. 4.2 SENTECH shall implement systems and processes that give assurance that the potential for fraud and corruption across all business areas is minimised. Systems and processes that provides assurance that actual incidences of fraud and corruption are detected and responded to shall also be implemented.

5. Framework for Fraud and Corruption Response SENTECH’s framework to fraud and corruption prevention and response is depicted in the diagram below. The details of the framework are contained in the detailed Fraud Prevention Plan.

Figure 18: Framework for Fraud and Corruption Response

6. Whistle Blowing SENTECH recognises the fact that unethical conduct and fraud within SENTECH is detrimental to good, effective, accountable and transparent governance within SENTECH and there is a need for procedures in terms of which employees may, without fear of reprisals, disclose information relating to suspected or alleged unethical conduct and fraud affecting SENTECH. And as such, a whistle blowing policy has been developed to ensure reasonable compliance with the PDA, which makes provision for the protection of employees who make disclosures in good faith.

A tip-off anonymous hot line is in place for the anonymous reporting of fraud and corruption activities. Tip-Offs Anonymous is completely independent, confidential whistle blowing hotline service operating 24-hours a day, 365 days a year. The service allows employees, customers, service providers and other stakeholders to report fraud and inappropriate activities in the Company in a safe, confidential and secure way.

62 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 ANNEXURE D: Materiality and Significance Framework

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 ANNEXURE D: MATERIALITY AND SIGNIFICANCE FRAMEWORK

1. LEGISLATIVE BACKGROUND

1.1 SENTECH, as a schedule 3B public entity, is governed by the PFMA and the 1.2 Treasury Regulations issued by the National Treasury and by the Companies Act. 1.3 Treasury Regulation 28.3.1 – “For purposes of material [sections 55(2) of the PFMA] and significant [section 54(2) of the PFMA] transactions, the SENTECH Board of Directors must develop and agree a framework of acceptable levels of materiality and significance with the relevant executive authority.” 1.4 Section 55(2)(b)(i) of the PFMA – “The annual report and financial statements referred to in subsection (1) (d) must include particulars of any material losses through criminal conduct and any irregular expenditure and fruitless and wasteful expenditure that occurred during the year.” 1.5 Section 54(2) of the PFMA – “Before a public entity concludes any of the following transactions, the accounting authority for the public entity must promptly and in writing inform the relevant treasury of the transaction and submit relevant particulars of the transactions to its executive authority for approval of the transaction:

a) establishment or participation in the establishment of a company; b) participation in a significant partnership, trust, unincorporated joint venture or similar arrangement; c) acquisition or disposal of a significant shareholding in a company; d) acquisition or disposal of a significant asset; e) commencement or cessation of a significant business activity; and f) a significant change in the nature or extent of its interest in a significant partnership, trust, unincorporated joint venture or similar arrangement.”

1.6 National Treasury Practice Note dated 13/07/2006 dealing with applications under Section 54.

2. DEFINITION OF MATERIALITY AND SIGNIFICANCE 2.1 The Accounting Standards Board defines materiality as “the magnitude of an omission or misstatement in the financial statements which, individually or collectively, makes it probable that a reasonable person relying on those statements would have been influenced by the information or made a different judgement if the correct information had been known.” 2.2 From an external audit point of view, ISA 320 defines materiality as follows: “Information is material if its omission or misstatement could influence the economic decisions of users taken based on the financial statements. Materiality depends on the size of the item or error judged in the particular circumstances of its omission or misstatement. Thus, materiality provides a threshold or cut-off point (quantitative), rather than being a primary qualitative characteristic which information must have if it is to be useful.” 2.3 The Concise Oxford Dictionary defines ‘significant’ as “extensive or important enough to merit attention” and may therefore be interpreted as of relative importance to the public entity. Transactions may be significant based on the monetary value of the transactions or due to the nature of the transactions. Thus, a transaction will be significant if conducting the transaction is vitally important in order to fulfil the public entity’s mandate and for it to operate effectively. 2.4 Significant’ may also be interpreted as those transactions that, in the case of SENTECH, would require approval from the executive authority or the National Treasury or Parliament and would include, but not be limited to, participation in a significant partnership, trust, unincorporated joint venture or similar arrangement; the acquisition or disposal of a significant shareholding in the organisation; the acquisition or disposal of a significant asset; and commencement or cessation of a significant business activity. 2.5 From the interpretations above, it can be seen that there is a difference between ‘material’ and ‘significant’. Significant is larger than material as a significant transaction impacts on the public entity as a whole. An occurrence may be material but not necessary significant, whereas any occurrence that is significant will be material.

64 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 2.6 As Treasury Regulation 28.3.1 also has an expectation of qualitative reporting, this framework will be dealt with in two main categories, namely quantitative and qualitative aspects. The policy set out hereunder should be appropriately presented in the Annual Report as required.

3. QUANTITATIVE FINANCIAL STATEMENT REPORTING 3.1 Quantitative Aspects 3.1.1 Material Losses (Section 55) Guidelines for setting materiality levels

BASIS Maximum Percentage 2019 Budget R’000 High Gross expenditure 1% 1 322 865 13 229 Gross revenue 1% 2 579 251 25 793 Net income 10% 107 678 10 768

Total assets 2% 290 434 45 809 809

From the above description of ‘quantitative materiality’, and considering the percentage guidelines listed in the table above, management is of the opinion that the most appropriate basis for calculating the quantitative material loss limit for SENTECH should be based on the annual budgeted gross operating expenditure

• The annual budgeted gross operating expenditure for the year is R1,323 billion. • Based on the above and the guideline table above, the quantitative materiality level for SENTECH is R13.2 million, being 1% (rounded off) of the annual budgeted gross expenditure. • Accordingly, all fruitless and wasteful expenditure and/or irregular expenditure that exceed the quantitative materiality level of R13.2 million will be reported in the annual report and the financial statements

3.1.2 Significance Framework (Section 55) From the above description of ‘significance’, and taking into account the percentage guidelines which is listed in the table above, SENTECH is of the opinion that the most appropriate basis for calculating the significance limit for the purposes of Section 55 of the PFMA should be based as a percentage of total assets, specifically in view of the fact that SENTECH is an infrastructure company and is currently engaged in various major projects which will also translate into assets in future years.

Total assets of R2,29 billion include the following:

• Property, plant and equipment, forecast for 31 March 2019 at R941,3 million; • Other assets at R1,349 billion.

Based on the above and the guideline table above, the quantitative significance level for SENTECH is R45,8 million (excluding VAT), being 2% of budgeted total assets. The cost of total assets has increased from prior years because SENTECH records assets funded through Government Grants on a net basis. SENTECH expects to change its accounting policy to reflect the gross method and therefore the cost of total assets for the

3.1.3 Qualitative Aspects Materiality is not merely related to the size of SENTECH and/or the elements of its financial statements. Obviously, misstatements that are large either individually or in the aggregate may affect a ‘reasonable’ user’s judgment. However, misstatements may also be material on qualitative grounds. These qualitative grounds include amongst others:

Unusual transactions entered into that are not of a repetitive nature and are disclosable purely due to the nature thereof (due to knowledge thereof affecting the decision-making of the user of the financial statements);

• Transactions entered into that could result in reputational risk for SENTECH;

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 65 • Any fraudulent or dishonest behaviour of an officer or staff member of SENTECH – for example, losses resulting from criminal conduct may be seen as material, based on the public accountability of SENTECH, regardless of the monetary value of the amount; • Procedures/processes required by legislation or regulation.

4. APPLICATION AND REPORTING 4.1 The materiality matrix is developed and communicated to relevant management before the start of the financial year. This enables SENTECH to make decisions as to what should be reported as losses or irregular, fruitless or wasteful expenditure. SENTECH is then able to ensure that the correct information is included in the annual report and financial statements. 4.2 All transactions that result in a loss to SENTECH (including irregular, unauthorised and fruitless and wasteful expenditure, and losses resulting from criminal conduct) should be recorded in a register. The PFMA defines ‘irregular expenditure’ as expenditure incurred in contravention of the PFMA or any applicable legislation or incurring expenditure not in accordance with the mandate of SENTECH. ‘Fruitless and wasteful expenditure’ refers to expenditure which was made in vain and would have been avoided had reasonable care been exercised. 4.3 All material losses must be reported to the CFO who should ensure that the transaction is appropriately allocated in the general ledger and recorded in a central loss register. 4.4 An explanation detailing all information and reasons surrounding the transaction as well as amounts recovered and strategies developed to prevent similar losses in the future must be included. 4.5 No officer may condone any material loss incurred directly by him or through instructions issued by him. 4.6 All amounts referred to in paragraph 5.1 and 5.2 must be reported to the Board. 4.7 When developing the Three-year Rolling Audit Plan and the Annual Audit Coverage Plan, the Internal Audit Function must ensure that sufficient attention is given to the audit of material items which may fall through the gaps in the existing control systems. 4.8 Material and significant events will be reported to the following parties:

• External: Minister of Telecommunication and Postal Services (The Minister); and • Internal: SENTECH Board and EXCO

4.9 The reporting of applicable material and significant events (PFMA – Section 54) to The Minister will be done formally in writing before the transaction is concluded. 4.10 The public entity must include the materiality and significance framework in the following documents to be submitted to the entity’s executive authority:

• Annual Report [TR 28.2.1] • Corporate Business Plan [TR 29.1.1(f)] • Strategic Plan [TR30.1.3(e)]

66 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 5. ACCEPTANCE LEVELS OF MATERIALITY AND SIGNIFICANCE

Definitions Framework Underlying Principles Materiality for section 55 of the Quantitative: • Each loss due to criminal PFMA-Disclosure, in the Annual conduct, irregular Report, of: For purposes of reporting the expenditure or fruitless and • Losses due to criminal incidence of losses due to criminal wasteful expenditure, as conduct conduct, irregular expenditure, identified, will be evaluated and fruitless and wasteful in context of the expense • Irregular expenditure expenditure, in terms of section category to which it relates, • Fruitless and wasteful 55(2) (b) (i) of the PFMA; disclosure to determine whether it expenditure shall be made where the loss or qualifies for disclosure in the expenditure is equal to or greater Annual Report as required than R13.2 million. by Section 55. • In line with good business Qualitative: practice, as well as the requirements of the Act, Over and above the financial SENTECH is committed to considerations of materiality, any the prevention, detection losses due to criminal conduct of and taking appropriate are considered to be material action on all irregular by nature, irrespective of the expenditure, fruitless and quantum thereof. wasteful expenditure, losses resulting from criminal It is, therefore important to note conduct and expenditure that the quantitative measures not complying with the of materiality will only apply to operational policies of expenditure other than irregular SENTECH (Sec 51(1)(b)(ii)). expenditure and fruitless and wasteful expenditure, and losses To this end SENTECH’s systems due to criminal conduct which and processes are designed and are considered in terms of the continually reviewed to ensure the qualitative measures. prevention and detection of all such expenditure, irrespective the size thereof.

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 67 Definitions Framework Underlying Principles Significant for Section 54 – Quantitative: The PFMA is not intended Information and approval by to affect the autonomy of the Minister of ‘Qualifying Qualifying transactions of an SENTECH, but its stated transactions’, i.e.: operational nature, objectives are to ensure • establishment or transparency, accountability and participation in the Qualifying transactions of a sound management of revenue, establishment of a company strategic nature expenditure, assets and liabilities of the institutions to which the Act • • 10% of equity. applies. Therefore, the legislature • Equity participation in a Regardless of the monetary could not have intended for the significant partnership, trust, value thereof, all direct equity public entities to report and seek unincorporated joint venture investments: approval on matters on a daily or similar arrangement basis. (applies to both local and • greater than 20% require • The operations of SENTECH international transactions); formal information to the Executive Authority; or are conducted within the • acquisition or disposal of framework of the mandate, • greater than 50% require significant shareholding in objects and powers of the approval by the Executive an organisation; SENTECH Act, as well as Authority. • acquisition or disposal the operational and financial of a significant asset; direction set out in the commencement or cessation Qualitative: Strategic Plan. of a significant business • SENTECH also has defined A qualifying transaction may also activity; and accountability and approval be considered significant based • a significant change in structures from the on considerations other than the nature or extent of Board, as the Stakeholder financial when, in the opinion its interest in a significant representative, for the CEO of the Board, it is considered to partnership, trust, and management. be significant for the application unincorporated joint venture of Section 54. The decision • The responsibility for or similar arrangement on which non-financial issues day-to-day management (locally based or may be considered at any time of SENTECH rests international transactions). requires careful judgment at in line management a strategic level, and should through a clearly defined therefore rest with the Board as organisational structure and the representative body of the through formally delegated stakeholders. As an example, the authorities. Board may consider a qualifying transaction as significant when it could impact significantly on a decision or action by the Minister.

6. AMENDMENT AND REVIEW

Unless otherwise agreed this Materiality and Significance Framework will be reviewed after a period of three years.

68 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 7. SIGNATURES

Signed by the Minister at ……………………………………... on the …………………of …………………... 2018

………………………………………………………...……………... Minister of Telecommunications and Postal Services

Signed for as on behalf of SENTECH at ………………………on the …………………of …………………... 2018

………………………………………………………...……………... Chairperson of SENTECH

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 69 NOTES:

70 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 NOTES:

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 71 NOTES:

72 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 NOTES:

SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 73 NOTES:

74 SENTECH SOC LTD Corporate Plan MTEF 2018 - 2021 Sentech Head Office Sender Technology Park (STP) Octave Street Radiokop 2040

Private Bag x06 TEF 2018/21 Honeydew 2040 TE PLAN M

Phone: 011 471 4400 / 0860 736 832 A Email: [email protected] ORPO R

Website: www.sentech.co.za C