3rd QUARTER REPORT FOR YEAR ENDING MARCH PORTFOLIO COMMITTEE ON TELECOMMUNICATIONS AND POSTAL SERVICES 17 MARCH 2015

CONTENTS 1.PERFORMANCE OVERVIEW 2.PRE-DETERMINED OBJECTIVES 3.PROFITABILITY PER SERVICE 4.FINANCIAL STATEMENTS 5.CAPITAL EXPENDITURE 6.HUMAN RESOURCES 7.CORPORATE GOVERNANCE

Performance Overview 3 SENTECH is pleased to present the results for the Q3 that ended December 2014 to the Department of Telecommunications and Postal Services. Overall Performance

Pre-Determined Objectives 4 SENTECH is pleased to present the results for the Q3 that ended December 2014 to the Department of Telecommunications and Postal Services. Overall Performance

Pre-Determined Objectives (Non-performance) KPI Annual Target YTD Quarter Variance Explanation TargetActual Number of VSAT terminals installed (Ethniks 38, Centlec 1,) One of the key solutions driving this target is the roll out of the Ka Band frequency which is currently not yet completed. A process to provide VSAT terminals to community broadcasters is currently underway and is expected to be completed by March Number of public sector ICT infrastructure services installed/enabled through CSI programme 1497 A listing of additional schools has been received from DTPS. An implementation plan is in place to install VSAT at the remaining schools. Customer and stakeholder service index Baseline + 5% No performance conducted The focus during this quarter was on implementing the recommendations from the previous survey. The procurement process is currently underway to appoint a service provider to perform the survey in the current financial year. This process is expected to be completed by March Percentage of training implementation plan achieved (Interventions to address identified critical skills gaps) 80%60%50.90% The reasons for the variance include, the postponement of certain courses as well as delayed procurement. A dedicated resource to assist with the finalisation of the procurement ( requisitions and follow up on purchase orders) as well as scheduling of training has been appointed in November. The scheduled training interventions will be monitored on a weekly basis to ensure the achievement of the annual target. 5

Profitability Per Service (Year-to-date) 6 Television Radio DTH Rental VSAT There was positive growth of 2% above budget: Establishment revenue of 2 Low Power sites namely Makgaung and Ga Mafefe. Successful DTT rate card negotiations with MNET, e.tv and TBN. FM, MW & SW have realised revenues above budget for the YTD. However, as reported in previous quarters, FM is experiencing challenges on 3rd Party site acquisition and has impacted the delivery schedules for community broadcasters. There has been an improvement on DTH with the following customers launched in Q3: Multichoice contracted 70 Mbs, Teach Every Nation (TEN) and Enlightened Christian Gathering (ECG) TV launched their new services. Revenue is 22% below budget on a YTD basis. A new facility rentals’ tariff was approved and discussed with Cell C, Vodacom, Comsol and Netstar. VSAT is slightly above budget with less than budgeted losses reported due to the following: Mainly the budgeted cancellation of the KZN DoE did not materialise.

7 Financial Statements Statement of Comprehensive Income and Ratio Analysis Statement of Comprehensive Income (R’000) summarised: Variance Analysis The positive performance on EBIT was driven by: o Once-off recoveries of Mandela funeral costs and DTT Dual illumination costs; and o lower than expected operational expenditure primarily driven by: lower spend on discretionary cost items, such as professional and consulting, corporate communication. As a result of the improved EBIT, the annualised Return on Net Assets (RONA) as at Q3 FY2015 is projected at 12.82% against a target of 6%.

GRANT Funds - CAPEX Report 8 DTT sites launched during Q3:  Kuruman Hills – 14 October 2014  Springbok – 30 October 2014  Garies – 31 October 2014  Upington – 18 November 2014  Upington Town – 5 December 2014  Piet Retief – 12 December 2014  De Aar – 18 December 2014  Pomfret – 18 December % Population covered 53.89% Geography covered

DTT Project Status Report – 27 February Existing Sites Greenfield sites Province Total Complete In Progress % Completed Free State % 1 Harrismith Gauteng % Kwazulu Natal % Limpopo % 1 Burgersfort Mpumalanga % North West % Eastern Cape % 2 Holy Cross Ngqeleni Northern Cape % Western Cape 35341Napier97.1% Total % 4

HUMAN RESOURCES Headcount and Resourcing The graph reflects staff complement against the approved ●17 appointments were made (internally and externally) of which 88% are black and 41% were black females. 10 Staff Turnover Sentech’s turnover rate for Q3 was 1.9%, comprising 0.9% resignations and 1% involuntary terminations (death/retire). Only 1 black female resigned during the quarter. Skills development Cumulative achievement of 50.5% of the annual target of 1664 planned interventions was achieved compared to the 38% achievement in the previous quarter.

Corporate Governance – Audit Outcome & Progress Audit Outcome Bilateral meeting with the Minister Progress on administrative matters in FY2014 ●Management developed an Audit Action Plan addressing all admin issues. ●EXCO monitors Audit Action Plans – Monthly basis. ●Audit Committee monitors progress on a quarterly basis. 11 FY2010FY2011FY2012FY2013FY2014 Qualified opinion Unqualified (with other matters) Unqualified (Clean)

SENTECH SOC Limited