1. MEDIUM TERM BUDGET POLICY STATEMENT Lyndall Shope-Mafole Director-General 1 November 2005
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2. Table of content MTEF Adjustment Estimates
Joint budget committee requested the
department to present on issues impacting
the department pursuant to the Minster of
Finance tabling of MTPBS in Parliament with
regard to:
MTEF
Adjustment Estimates
Significant under spending in the last three years by the department
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Making South Africa a Global Leader in harnessing ICT’s for Socio-Economic Development

3. Policy Priorities requiring funding over the MTEF
In pursuit of its strategic goal of positioning the ICTs to enable socio-economic development, especially addressing challenges of the second economy; the Department identified the following priorities as requiring above baseline funding :
Sentech’s infrastructure investments in digitizing the signal distribution network, broadening its Wireless broadband and investment in the EASSy cable
South African Post Office network expansion
Roll out of Regional Television Broadcasting Services
Strengthening ICASA
Uncapping the Universal Services Fund (USF)
Operationalising the Meraka Institute
Department Restructuring
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Making South Africa a Global Leader in harnessing ICT’s for Socio-Economic Development

4. Recommendations over MTEF period
MTEC recommended to Mincombud
Initial funding for Sentech’s signal distribution
Increased funding to Strengthen ICASA
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Making South Africa a Global Leader in harnessing ICT’s for Socio-Economic Development

5. Recommendations over MTEF period
The department strategies on MTEC recommendations
Regional Television Broadcasting services to be linked with digitisation programme of Sentech and its 2010 initiatives
SAPO network expansion to be funded from its current subsidy
Implementation of DOC Restructuring outcomes to be funded through internal reprioritization
Sentech (Signal Distribution, Wireless broadband and EASSy) USF and Meraka Institute to follow up with Treasury and Mincombud

6. SENTECH Signal Distribution
Mtec recommends 200 million out of 600 million required. This is grossly insufficient as:
Sentech is the sole transmitter of radio and television programmes of SABC and some commercial and international broadcasters.
The current analogue infrastructure is old and obsolete and therefore Sentech has no choice but to replace the transmission network
Currently utilises outdated and inefficient analogue infrastructure
Replacement of existing infrastructure with similar analogue will result in significant wastage as South Africa will be migrating onto the digital system as part of international coordinated migration strategy
The following graph indicates that;
More than 10% of the network is more than 25 years old
More than 14% is between 20 and 25 years old. Taking the above into account more than 24% of the network is 20 and more years old.
26% of the network is fifteen years old and more.
28% of the network is between 10 and fifteen years old.
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Making South Africa a Global Leader in harnessing ICT’s for Socio-Economic Development

7. The 10 oldest high-powered transmitters cover about 26 million people.
Transmitter Age Distribution
The 10 oldest high-powered transmitters cover about 26 million people.

8. SENTECH Signal Distribution…
Advantages of Digitization:
Prioritizing the needs of the second economy
Supporting local languages and local content, through the initiation of new channels that will broadcast in all South African languages. It is envisaged that, initially, up to 16 channels will be available once the network infrastructure of Sentech is digitised
Sustainable Job creation
Access to government and parliamentary information through technical support and connectivity to the Satellite Communications Network that links Parliament , the seat of Government and the Community Stations.
Meeting 2010 guarantees
Supporting efficient licence fee collection through the introduction of set top boxes which will enable effective license fee collection since it would be possible to disable reception on payment defaults
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Making South Africa a Global Leader in harnessing ICT’s for Socio-Economic Development

9. Wireless Broadband infrastructure
Sentech currently supports governmental priorities and agenda in the following areas:
Access to health services and health literacy
Supporting implementation of the e-education policy
Supporting delivery of Government services
Security-Sentech is developing a highly secure communications package in collaboration with Grintek that will meet the requirements for secure communications required for 2010 World Cup.
Sentech was appointed as SITA’s delivery partner for broadband services to the State- this will be the basis of vastly increased services delivery to and through State Departments, enabling them to improve efficiency in the provisions of Government services.
Initial capital injection will enable Sentech to add shareholder value, both as a delivery partner of the State and as a business.
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Making South Africa a Global Leader in harnessing ICT’s for Socio-Economic Development

10. NEPAD and the East African Submarine Cable System (EASSy)-R130mil
Sentech is active in the African continent, offering services and implementing projects related to broadcasting signal distribution.
EASSy’s objective is to provide high quality and efficient communication services to the eastern half of the Saharan Africa at a more competitive price and provide competition to the West African submarine cable (WASC)
EASSy will provide the affordable broadband access for the African continent to the rest of the world.
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Making South Africa a Global Leader in harnessing ICT’s for Socio-Economic Development

11. ICASA
The Convergence Bill approved by Cabinet places additional duties and responsibilities on ICASA, for which they are not currently funded.
Convergence legislation requires ICASA to redesign current regulations to address convergence, convert existing licenses, redesign license pricing schemes and training of staff to meet convergence challenges.
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Making South Africa a Global Leader in harnessing ICT’s for Socio-Economic Development

12. Funding Requirements over the MTEF
Policy Priority
2006/07 R’000
2007/08 R’000
2008/09 R’000
Sentech
200,000
300,000
500,000
SAPO
63,250
Regional Television
ICASA
177, 000
177,000
Universal Services Fund
Meraka Institute
65,200
Restructuring
65,000
TOTAL MTEF REQUIREMENTS
1,810,450
1,242,450
1,505,450
Mtec Recommendations
- Sentech
- ICASA
95,000
40,000
50,000
60000
TOTAL RECOMENDATIONS
135,000
100,000
DEFICIT
1,675450
1,142,450
1,405,450
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Making South Africa a Global Leader in harnessing ICT’s for Socio-Economic Development

13. Adjustment Estimates per Economic Classification
Main Appropriation
Roll-over
Virement¹
Total
additional appropriation
Adjusted Appropriation
Operations
4 105
27 355
31 460
Transfers and subsidies
10 075
Payments for capital assets
6 480
220
6 700
TOTAL
14 180
1. Consists mainly of Sapo extension of services, and other internal transfers.
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Making South Africa a Global Leader in harnessing ICT’s for Socio-Economic Development

14. Roll-Overs
Not all funds appropriated in 2004/05 for the Community Radio Stations have been spent. Due to the inability to issue licenses to the Community Radio Stations, equipment was not purchased for these stations, as this would have resulted in additional expenditure for storage and insurance as the equipment can only be supplied to licensed radio stations. R10,075 million has been rolled over.
As a recommendation from Treasury, the Department had to conduct a feasibility study on the possible ways of funding the Regional Television Channels. The feasibility study to develop a PPP has been completed and the option analysis is currently in progress. R4,105 million has been rolled over.
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Making South Africa a Global Leader in harnessing ICT’s for Socio-Economic Development

15. Reprioritisation
The reprioritizing of funds is mainly due to the restructuring of the department.
The programme structure changed and therefore the business objectives changed accordingly.
Reprioritized funds for professional and special services to salaries.
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Making South Africa a Global Leader in harnessing ICT’s for Socio-Economic Development

16. Expenditure Trends as at end of September 2004
Economic Classification
Adjusted Appro-priation
April – September
October – March
Total Preliminary outcome
Actual expendi-ture
% of adjusted appropria-tion
Current Payments
99 557
42,7%
49,9%
Transfers & subsidies
20,3%
79,1%
Payments for capital assets
6 513
1 810
27,8%
1 362
20,9%
3 172
TOTAL ¹
23,4%¹
74,8%²
Discount the 750 million and the % spent increase to 30%. It is important to note that
despite the once off allocation of 750 million the % spent in the current financial year is
significantly higher than the previous years.
2 Discounting R750 amount to 506 million
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Making South Africa a Global Leader in harnessing ICT’s for Socio-Economic Development

17. Expenditure Trends as at end of September 2005
Economic Classification
Adjusted Appro-priation
April – September
October – March
Actual expendi-ture
% of adjusted appropria-tion
Projected expendi-ture
Current Payments
41,9%
51,9%
Transfers & subsidies
42,8%
59,5%
Payments for capital assets
6 700
3 476
3 003
44,8%
TOTAL
42,6%
57,4%
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Making South Africa a Global Leader in harnessing ICT’s for Socio-Economic Development

18. Expenditure Trends
Significant improvement on the spending trends for the first six months of the financial year.
2004/05 – 23,4% ( Discounting conditional grants = 30%).
2005/06 – 42,6%
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Making South Africa a Global Leader in harnessing ICT’s for Socio-Economic Development

19. Spending Patterns 2000/01 R’000 2001/02 2002/03 2003/04 2004/05 Budget
- Normal
- Conditional
Spending
Roll-over
28 787
20 000
3 000
23 206
Approved Roll-over
14 180
Deficit/
Surplus
967
972
102
27 241
9 028
Savings
% to budget
0,20%
0,08%
0,35%
0,3%
Exc Cond 1.6%
1.8%
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Making South Africa a Global Leader in harnessing ICT’s for Socio-Economic Development

20. THANK YOU
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Making South Africa a Global Leader in harnessing ICT’s for Socio-Economic Development