CASE STUDY

Tellumat

Tellumat is one of the few South African companies with core competencies in design, manufacturing and the rollout of specialised communications solutions, microwave and RF technology-based products. The company is also an experienced contract electronics manufacturer, manufacturing digital TVs and traditional and smart utility meters.

Investing in the economy

Summary of operational performance

Information Communication Technology (ICT) SBU
Performance   2010   2011   2012   2013  
Total value of financing approved (Rm)  183   410   532   1 045  
Total number of jobs expected to be created or saved   3 000   2 131   1 766   211  
Impairments as a % of outstanding book (at cost excluding undrawn commitments)  43%   26%   25%   26%  
Focus areas  
Broadband infrastructure  
e-Waste and demand-side management  
Electronics  
Digital migration – local manufacture of set-top boxes  
 


Highlights  

2009   2010   2011   2012   2013  
  • Funding approvals to two projects that supplement SA and the region’s telecommunication fixed-line fibre and satellite infrastructure
  • Promotion of regional equity by diversifying out of Gauteng and metropolitan areas through facilitating two investments in Ixopo and East London
  • In line with diversifying funding across different subsectors, the unit increased its exposure to the electronic sector, with approvals totalling R82m. This was part of the advanced technology focus, identified in IPAP
  • To support the development of the electronic and electrical waste (e-Waste) industry, commenced with a feasibility study which is an essential component of SA’s waste management plan
  • Funding approval to a contract electronic manufacturer to support the local manufacture of digital TVs in the Eastern Cape, creating jobs, facilitating import replacement and skills transfer
  • As part of SADC regional integration, funding approval to a mobile incumbent to increase its network capacity
  • Approval of first phase of an open access last mile business model
  • Increased funding into the broadband infrastructure services and contractor sub-sector
  • Funding of an electrical services subcontractor as part of the REIPPP programme
  • Funding approvals by two business partners in anticipation of set-top box (STB) manufacture as part of digital migration process
  • Project development in rural underserved regions and continued last mile focus
  • Localisation of LED manufacture as part of energy demand-side management


Recent performance  

ICT is a critical enabler in an increasingly networked world, with communication forming the backbone of any modern economy. Government acknowledges this fact, as underlined in the NGP, IPAP and the NDP. The overriding objective of the documents is to focus on providing universal ICT access and increasing local broadband penetration to 100% by 2020. Generally, broadband infrastructure has been central towards achieving the goal of digital inclusion, enabling universal, sustainable, ubiquitous and affordable access to ICTs by all. It is in this context that the IDC has been focusing on broadband supply-side infrastructure interventions. Despite the fact that some of these projects failed to meet the financial sustainability criteria with further project and business model development being required, the IDC’s performance in terms of funding approvals to the sector amounts to just over R1 billion.

Impact of increasing broadband access on GDP  

Studies conducted by the World Bank have shown that a 10% increase in high-speed Internet connections can increase a country’s economic growth by 1.3% and this effect is magnified in developing countries.

This was supported by the fact that our sub-sector funding focus areas extended beyond the traditional telecom and IT spheres, with funding approvals into the electronic and energy demand-side (ICT Green) sectors also recording a substantial increase. This included supporting the localisation of STB manufacture as part of the migration from analogue to digital; increased support for the local manufacture of OEM branded digital TVs; as well as funding local smart meter and LED lights manufacturers to increase production capacity.

Challenges  

On the broadband side, local pricing is still perceived as being too high and infrastructure interventions need to occur based on a co-ordinated, integrated national broadband plan and strategy. This is emphasised in the NDP, where it is suggested that policy constraints, conflicting policies between responsible departments, regulatory failure and limited competition all contribute to this issue. With wireless being considered a suitable technology for broadband provisioning in the last mile access level, as well as to rural and underserved areas, the unresolved issues around spectrum allocation and delayed digital migration timetable all serve to exacerbate the problem. With the launch of the PICC’s SIP 15 initiative late last year it is hoped that a more coordinated approach, leveraging private sector investment, will deliver on the key principle of universal access and affordable broadband for all.

Strategy and prospects  

The primary strategic objective of the SBU is to continue playing a role on the supply-side in terms of provisioning of broadband infrastructure across various access levels in South Africa and regionally. With international connectivity largely being met, the focus is on terrestrial capacity. This is to be achieved by funding projects that increase network capacity and create competition. In particular, projects that extend coverage to last mile, metro as well as rural and underserviced areas, thereby resulting in a overall reduction in prices. With the requirement to participate in the national policy-making and strategy formulation discussions around broadband, the SBU is looking to work closer with the government and industry stakeholders.

The second broad strategic objective is to facilitate localisation of manufacture. Firstly, in the electronics sector (including STBs, LED lights and smart meters manufacture); and secondly, to develop the e-waste industry as part of ICT SBU’s Green initiatives.

Coega Dairy Holdings

The IDC has identified increased competition in the dairy value chain and import substitution in the cheese industry as key sector development goals. We also singled out the need for increased farmer (and specifically B-BBEE) participation in dairy value-adding initiatives.

Windtown Lagoon Resort 

The newly built Windtown Lagoon Resort and Spa reflects the IDC’s focus to funding community-based projects that have potential to create employment opportunities in far-flung regions.


APPROVALS
R13.1 billion
DISBURSEMENTS
R16.0 billion
JOBS FACILITATED
18 922
JOBS SAVED
3 950
© The IDC 2013. All rights not expressly allowed are reserved. P.O. Box 784055, Sandton, 2146, South Africa