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Sentech Strategic Plan 20/21-24/25 & Annual

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Sentech Strategic Plan 20/21-24/25 & Annual SENTECH STRATEGIC PLAN 20/21-24/25 & ANNUAL PERFORMANCE PLAN 2020/21–2021/22 REVISED VERSION APRIL 2020 1 SENTECH SOC LTD Corporate Plan FY2020/21 -2024/25 ABBREVIATIONS Ad Advertisement ARC Audit and Risk Committee ASO Analogue Switch-Off ATV Analogue Television B2B Business to Business B-BBEE Broad-Based Black Economic Empowerment Board Accounting Authority BSD Broadcasting Signal Distribution BTR Business Television and Radio BTV Business Television CAGR Compound Annual Growth Rate 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 DCDT Department of Communications and Digital Technologies DTH-S Direct-to-Home Satellite DTPS Department of Telecommunications and Postal Services DTT Digital Terrestrial Television EBIT Earnings Before Interest and Tax 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 EMEA Europe, the Middle East and Africa ESD Enterprise Supplier Development EXCO Executive Committee FM Frequency Modulation FTA Free-To-Air FY Financial Year GDP Gross Domestic Product ICASA Independent Communications Authority of South Africa (Regulatory Authority) ICT Information and Communications Technology ISA International Standard on Auditing 320 I-ECNS Individual Electronic Communications Network Services I-ECS Individual Electronic Communications Services IoT Internet of Things IPTV Internet Protocol Television IMT International Mobile Telecommunications ITA Invitation to Apply ITU International Telecommunications Union KPI Key Performance Indicator M&A Mergers and Acquisitions Minister Minister of Communications and Digital Technologies MOI Memorandum of Incorporation 2 SENTECH SOC LTD Corporate Plan FY2020/21 -2024/25 MTEF Medium Term Expenditure Framework MTSF Medium Term Strategic Framework MUX Multiplex MVNO Mobile Virtual Network Operators MW Medium Wave NDP National Development Plan NKP National Key Point NPAT Net Profit After Tax NUMSA National Union of Metalworkers South Africa OTT Over-the-top Services PDA Protected Disclosures Act of 2000 PFMA Public Finance Management Act, No. 1 of 1999 PPCTPS Parliamentary Portfolio Committee on Telecommunications and Postal Services PRECCA Prevention and Combating of Corruption Activities Act 12 2004 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 and Economic Development SENTECH Act SENTECH Act, Act No. 63 of 1996 SLA Service Level Agreement SMME Small, Medium and Micro Enterprise SOC State Owned Company STL Studio-to-Transmitter Link SW Short Wave TR Treasury Regulation TRIR Total Recordable Incident Rate TV Television VSAT Very Small Aperture Terminal WOAN Wireless Open Access Network WRC World Radiocommunication Conference 3 SENTECH SOC LTD Corporate Plan FY2020/21 -2024/25 TABLE OF CONTENTS ABBREVIATIONS ..................................................................................................................... 2 CHAIRPERSON’S STATEMENT ............................................................................................ 5 CHIEF EXECUTIVE OFFICER’S STATEMENT ................................................................... 6 OFFICIAL SIGN-OFF ................................................................................................................ 8 1. OUR MANDATE ................................................................................................................. 9 2. OUR STRATEGIC FOCUS ............................................................................................... 9 3. SITUATIONAL ANALYSIS ............................................................................................. 17 4. MEASURING OUR PERFORMANCE .......................................................................... 25 4.1. Impact Statement 25 4.2. Annual Performance Plan 25 4.3. Five Year Strategic Plan FY 2020/21 – 2024/25 27 4.4. Performance Indicators for the MTEF Period 2020/23 28 4.5. Annual Performance Plan (FY 2020/21) 29 4.6. Annual Performance Plan – Quarterly Targets FY2020/21 30 4.7. Key Risks 32 5. TECHNICAL INDICATOR DESCRIPTIONS ................................................................ 34 6. FINANCIAL PLAN ............................................................................................................ 39 7. MATERIALITY AND SIGNIFICANCE FRAMEWORK ............................................... 48 8. FRAMEWORK FOR FRAUD AND CORRUPTION RESPONSE............................. 55 4 SENTECH SOC LTD Corporate Plan FY2020/21 -2024/25 Chairperson’s Statement We live in interesting economic times characterised by technological disruptions and exponential change fuelled by the fourth industrial revolution. The Shareholder’s own structural integration and review and re-configuration of its entities opened up new and exciting opportunities for SENTECH. Through a better understanding of the Shareholder’s strategy as it had emerged from recent strategy workshops, there would be an opportunity for SENTECH to consider how best it could contribute to the achievement of the overall Department of Communications and Digital Technologies (DCDT) mandate. These were also challenging times for most State Owned Companies (SOCs) who all had to take stock of what and how they were doing and implement step-changes to their ways of working and service delivery. The context that SOCs found themselves in were also challenging. The economy had declined and is in a poor shape, many SOCs were dealing with instances of challenges in corporate governance had to rethink their way forward. If we were to consider the ‘beautiful/incredible constraint’ theory and were to ask ourselves what we would do if there were no rules or constraints, we would rise to the challenge with new forms of creativity and innovation. In the SENTECH context, there was an urgent need to diversify services and thus revenue streams and reduce dependency on the South African Broadcasting Corporation (SABC). SENTECH’s strategy is geared towards sustainable path of venturing into new markets and new products in this disruptive environment. It is a strategic response to the fourth industrial revolution and the Department of Communications and Digital Technologies (DCDT) mandate to enable connected and digitally transformed society to foster socio-economic growth. The Board has ensured that this Strategic Plan is aligned to the policy priorities of government, in particular the DCDT. The Board has and will continue to provide direction on the development and implementation of strategic priorities and policies and aligning these with shareholder priorities. The Board presents the Strategic Plan and the Annual Performance Plan and is committed to ensuring its implementation. __________________________ Dr Sandile Malinga Board Chairperson 5 SENTECH SOC LTD Corporate Plan FY2020/21 -2024/25 Chief Executive Officer’s Statement SENTECH has developed the Strategic Plan in response to the demands for communications services driven by the fourth industrial revolution (4IR) opportunities and challenges, tough socioeconomic and regulatory environments. The changing industry landscape and internal organisation capabilities and opportunities have been considered in developing the strategic plan. This is reflected in our seven strategic pillars of optimisation and growth; innovation and digital readiness; talented people; transformation; reputation; customer centricity and environmental preservation. SENTECH’s aspiration going forward is to be an Information and Communications Technology (ICT) company that delivers connectivity and content across all platforms. These platforms include satellite, terrestrial, streaming and OTT. If SENTECH does not move into all platforms, it will be exposed to a risk of losing customers, encouraging competitors to enter into its business space and not being able to configure the appropriate value-based solutions for customers. A key initiative for SENTECH is to lead digital migration going forward. Part will be funded through digital migration funds coming from the DCDT and part will be self-funded. It is an important initiative that will also contribute to closing broadband access gaps and freeing spectrum for mobile services. The issue of optimising the core business, increasing value-add to broadcasters and decreasing tariffs is important. Current margins ranged from 8% to 10%. SENTECH’s focus is on retaining business whilst expanding the value it could contribute, for example by taking over broadcaster’s non-core technology assets. Growth is largely dependent upon an increase in buying power in the economy. This is a driver for advertising revenue in the content delivery industry and audience services consumption. In this economic environment, it was difficult to take investment decisions that had a short term impact. Creating momentum in building the business of the future through a focus on SENTECH Connect, a broadband service e-offering as an important imperative to deliver on broadband connectivity in line with the DCDT’s priorities. SENTECH had to reconsider and change both in its investment and broadband strategies. It is clear that ‘investing ahead of the curve’ would be required.
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