As the Department of Telecommunications and Postal Services (DTPS) outlined its efforts to rationalise the State-owned companies (SOCs) that report to it, confusion had shrouded the deliberations of the governing parliamentary portfolio committee as there were more questions than answers in terms of what progress had been made by the department.

This followed a presentation last week by DTPS director-general Rosey Sekese to the committee on the progress of the alignment of the 100%-owned Sentech, the South African Post Office, the State Information Technology Agency, Broadband Infraco (BBI), the Universal Service and Access Agency of South Africa and the National Electronic Media Institute of South Africa.

All the entities, including majority government-owned JSE-listed telecommunications giant Telkom, were capable of playing a role in delivering affordable broadband across South Africa.

On the back of significant duplication, inefficiencies, poor governance, ineffectiveness, wastage of scarce financial resources, a lack of clear understanding of mandates, “very weak” funding mechanisms and overall poor performance, a Presidential Review Committee (PRC) had called for a continued in-depth micro-assessment of SOCs to assist the decision on the possible merging of entities to create a leaner, more efficient portfolio of parastatals.

The Department of Public Enterprises had acted on the recommendations of the PRC across all departments, with the DTPS rationalisation programme one of the flagship projects owing to the urgency in prioritising the alignment of SOC mandates with the vision of South Africa Connect.

Presenting the DTPS’s programme, Sekese said the SOC rationalisation steering committee had produced a definition of high-level principles to guide the rationalisation of SOCs in the information and communication technology (ICT) sector and had analysed the relevant policies and legislation.

The committee was established to identify issues around policy and regulation, economics, business and technology, with a focus on any operational issues.

A technical support team had analysed the PRC reports and its relevance to SOCs in the ICT sector, as well as policies and legislation and the technical and commercial capabilities of the SOCs, all of which would lay the basis for further work.

However, a lack of detailed and in-depth information had attracted significant criticism from all members within the Portfolio Committee on Telecommunications and Postal Services.

“The committee wanted to get the feeling that the department was firmly in control of the whole process of rationalisation of SOCs. However, this presentation left more questions than answers,” said committee chairperson Mmamoloko Kubayi.

African National Congress committee member Juliana Kilian pointed out that the DTPS offered “very little” information on how it intended rationalising its entities, the phases of the processes or a proposed deadline, while Democratic Alliance DTPS Shadow Minister Marian Shinn said the plans outlined lacked “a clear vision” of what the department was trying to achieve with the rationalisation of SOCs.

“It seemed that the department was trying to set itself up as a network service provider, in competition with the private sector, which was not part of radical transformation in line with South Africa (SA) Connect,” she commented.

The future of BBI remained unclear, with Sekese only stating that the company had been instructed to undertake a valuation exercise and preserve its value in preparation for the SOC rationalisation.

“BBI is currently reviewing its business and financial plans, while engagements are taking place between government and [26% shareholder] the Industrial Development Corporation [to] share [their] views on the future of this company,” she added.

DTPS deputy director-general for shareholder oversight Sibongile Makopi indicated that the DTPS was also in talks with the financially strapped BBI to mitigate its “current predicament”.

“It would be important for the department to urgently consider the position and future of BBI, as the entity was in a unique financial difficulty and this would not be easily resolved,” he said.

With its role as a broadband connectivity provider, it had become necessary to deal with the relevant roles and responsibilities of the SOCs in the implementation of SA Connect and conserve resources by “doing away” with duplication.

The “issue” around BBI was essentially about removing all the current duplication and considering whether it would be possible to integrate the entity with other entities with similar functions, explained DTPS chief director for broadband Rendani Makhado.

Meanwhile, Sekese concluded that there was further work to be done, including the assessment of various options, synergies and an optional plan for the implementation of SA Connect.

“Exploration of various elements, including technical, legal and financial aspects of the rationalisation transaction, is ongoing. There will be an evaluation of a number of rationalisation options to assess the short, medium and long-term sustainability of each option, and the creation of an integrated strategic entity that will best serve the ICT national interest and SA Connect,” she noted.

However, Kubayi said there was “no logical reason” to support the programme of the department, especially when looking at the tools for oversight and how the programmes would be supported.