State signal distributor Sentech has defended the high signal distribution fees it charges the financially hamstrung SABC, saying the fees are necessary to ensure universal access to broadcasting.
The public broadcaster, facing a liquidity crunch, has said exorbitant costs associated with signal distribution could lead to its collapse.
On average, the SABC pays R72m a month for signal distribution or about R864m a year.
With the SABC’s coffers continuing to bleed as costs exceed revenue, the public broadcaster’s executives appealed recently to MPs to interrogate the signal distribution fees Sentech charges.
Briefing parliament’s communications portfolio committee on Tuesday, Sentech COO Tebogo Leshope, said the cost of maintaining and ensuring network availability was high, and the company had little choice but to pass these on to broadcasters.
The SABC is Sentech’s biggest client. In 2019, Sentech had revenue of R1.4bn, with the SABC paying the signal distributor about R830m that year, up from R781m in 2018.
Leshope said the SABC had a mandate to ensure public service broadcasting was delivered.
“Sentech ensures network availability for delivery of the mandate. We honour our service-level agreements to customers with 99.80% network availability by managing and maintaining the infrastructure. This preventative maintenance costs a lot of money,” Leshope said.
He said Sentech was looking consistently at innovative ways to offer its customers the best services in a cost-effective way.
Every financial year, before adjusting the tariff for inflation, a 2% discount was offered to the SABC, said Leshope. This financial year, the Sentech board approved a further 3.7% discount to assist the SABC with its cash-flow problems.
Sentech said an effective 5.7% discount was provided to the SABC. A payment holiday covering three months was also granted to assist the SABC with Covid-19 difficulties.
The payment holiday amounted to R215m but the SABC defaulted on its debt payments, the signal distributor said. However, the SABC had committed to catch up on any payment backlog by the end of the financial year.
Leshope said both companies were looking for a long-term solution.
“In the interim, SABC bills must continue being paid. Sentech has to stay sustainable while assisting [the] SABC to remain sustainable. We are partners.”
Last week, SABC executives told MPs that the broadcaster could no longer afford the steep radio and TV signal distribution costs.
SABC COO Ian Plaatjes told legislators that over the past five years the public broadcaster spent more than R3.2bn on Sentech distribution fees, which was not be sustainable.
"If we were to use private, third-party signal distribution suppliers outside of Sentech, we would actually be making a 94% saving. That is a huge amount to our bottom line. That is about R400m that we could utilise for content."
The SABC turnaround strategy also emphasised the use of satellite over terrestrial signal distribution networks, which could see the public broadcaster becoming less reliant on Sentech. But it could plunge the signal distributor into a financial crisis and create a major headache for the department of communications, the political authority responsible for both Sentech and the SABC.
Sentech was established as part of the technical division of the SABC responsible for signal distribution. However, in 1996 the Sentech Act was amended, paving the way for it to be a standalone entity responsible for providing broadcasting signal distribution services as a “common carrier” to licensed television and radio broadcasters.
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