CORPORATE PLAN 2018/21 - Parliamentary Monitoring Group

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CORPORATE PLAN 2018/21 - Parliamentary Monitoring Group
CORPORATE PLAN MTEF 2018/21

   2018/21
        CORPORATE PLAN
CORPORATE PLAN 2018/21 - Parliamentary Monitoring Group
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                                     i
CORPORATE PLAN 2018/21 - Parliamentary Monitoring Group
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
CORPORATE PLAN 2018/21 - Parliamentary Monitoring Group
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        1
CORPORATE PLAN 2018/21 - Parliamentary Monitoring Group
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
CORPORATE PLAN 2018/21 - Parliamentary Monitoring Group
Introduction
CORPORATE PLAN 2018/21 - Parliamentary Monitoring Group
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
CORPORATE PLAN 2018/21 - Parliamentary Monitoring Group
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                                                      5
CORPORATE PLAN 2018/21 - Parliamentary Monitoring Group
Organisational
Identity, Mandate
    and Structure
CORPORATE PLAN 2018/21 - Parliamentary Monitoring Group
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
3.9       Organisational Structure
Figure 1: SENTECH Organogram

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