[By Ivo Vegter] The latest example of a moribund state-owned enterprise is Sentech. It was once the signal distribution arm of the SABC, but was separated from its parent broadcaster when e-tv was licenced. It was encouraged to expand its lines of business by the former communications minister, Poison Ivy, and tried to break into the nascent wireless Internet access market with MyWireless.
It has failed. Badly. According to a report commissioned by Siphiwe Nyanda, the present communications minister, it is “rudderless, inadequately funded and misdirected”, is headed for “terminal decline”, and its board is, frankly, incompetent.
At R214m, its likely losses are nearly double what it budgeted for. The only thing that trends upwards at Sentech is the salaries of senior executives, who get fat on the taxpayer’s dime while doing exactly nothing for them.
It has also failed in the mandate that is the typical excuse for keeping socialist boondoggles on life-support: providing services to the poor.
Meanwhile, it sits on large swathes of valuable spectrum — blocks of radio frequency that could be used for all sorts of purposes by innovative companies that actually succeed in delivering services to their customers.
Duncan McLeod, in a column nearby, proposes privatising it. He makes a number of good points. However, the state would be at grave risk of falling into the same trap that the privatisation of Telkom posed, namely turning an inefficient public monopoly into a rapacious private one. Besides, what private investor would want such an albatross, without guarantees that the state will continue to prop it up and protect it from competition?
I’d go a step further. Just shut the whole melange down. Break it up. To protect e-tv from unfair competition against that other tax-funded disaster zone, the SABC, sell off the signal distribution business, and permit new entrants to compete in that market. If they can find buyers for the other bits and pieces, such as InfoSat, sell them. If not, draw a line under them and write the whole lot off as a bad idea.
Then take the spectrum that is freed up, and auction it off. Package it into useful chunks and put them on the open market. Those companies that can best utilise them, will bid the most. If they fail, they’ll sell the spectrum on to competitors who can do better. Making Sentech’s unused spectrum tradeable will be a good start for further spectrum allocation reform, and form a good case study on the feasibility of more general spectrum tradeability.
Sentech’s only remaining reason to exist is the transition to digital terrestrial television. Why a failed state-owned entity should be entrusted with this project is beyond me. Just put it out to tender. Let multiple companies compete at offering the best digital terrestrial television. That way, the losses are private, and the public might actually get an innovative service at a reasonable price.
It is high time that the SA government, which owns far too many moribund monopolies in critical industrial and infrastructure sectors, begins to realise that propping them up is the worst possible way to invest resources for socioeconomic upliftment. You can’t make poor people rich by rewarding failure and encouraging losses.
Ask, for example, whether Transnet’s monopoly on rail freight serves major customers, such as Kumba (iron ore) and the Richards Bay Coal Terminal, well. It doesn’t. They know that if they don’t build and maintain the railway lines themselves, or turn to expensive and inefficient road transport, their needs simply will not be met. If even big industrial customers that form the backbone of our economy cannot rely on getting service out of state-owned enterprises, what chance do the poor have?
No, don’t privatise Sentech. Euthanasia is a far better option.
- Ivo Vegter is a freelance journalist