Johannesburg — DEEP and divisive job cuts at Sentech are about to enter phase two, building on the dismissal of six key executives and more than 100 resignations. The six executives are allegedly being dismissed in a move insiders say has more to do with personality clashes than sensible streamlining.

The atmosphere of fear, back-stabbing and low morale led to 100 resignations last year. Ten more people resigned last month. Now, Communication Workers Union members are also in the firing line.

"I was tired of working for an organisation with no proper direction," said a manager who left recently. "The real issue is incompetence, and the problem lies in the executive committee and at board level."

Neither CEO Sebiletso Mokone-Matabane nor chief financial officer Siddique Cassim would give an interview. Instead, Sentech issued a statement saying the restructuring would align its resources with a revised strategy responding to changes in the business environment.

Asked to confirm that one in six people resigned last year, corporate communications manager Pranill Ramchander said: "Like any major IT company, Sentech has a relatively high degree of staff turnover. We don't believe staff turnover levels for the periods referred to are exceptional."

The internal mess looks like pure carelessness and bad management, but it may be the result of more calculated action. Government officials with no faith in Sentech may be hastening its downfall. The loss-riddled entity could be split up, with its prime assets sold to the private sector and its core signal distribution services run as a far smaller operation.

Sentech was spun out of the SABC when it was transmitting broadcasting signals. But a study in 1998 said signal distribution was insufficient to ensure long-term survival. Government needed to speed up the roll-out of broadband voice and data services that another protected entity, Telkom, was failing to supply.

So, in 2002, Sentech was given licences to offer multimedia and value-added network services. That gave it coveted spectrum that the cellular operators and large internet service providers are desperate to use, including WiMax, a wireless technology that covers large areas cheaply and efficiently. Sentech could probably sell those licences to Vodacom, MTN or a hi-tech company for R1bn, one manager estimates.

And it may as well, since its internet offerings have deteriorated badly.

The government has given Sentech so little money that its MyWireless service promising fast internet access has stagnated, with only eight base stations set up in the past two years.

Moreover, an executive decision to scrap a popular MyWireless option was so unpopular that almost half its customers logged off completely. That move, made against the advice of MyWireless managers, means the service now loses R1m a month.

Sentech's top priority is a R1bn project to digitise the national broadcasting network so the 2010 World Cup can be transmitted using digital technology. Sentech asked the communications department for R300m in 2003, R600m and a second chunk of R1,2bn in 2004, and R915m in 2005.

It received nothing until last year, when it was promised just R200m to cover three years. Yet at the same time, its CEO chose to sponsor the Women's World Cup of Golf for two years at a cost of about R10m.

The impossibility of Sentech's new mandate was evident at Parliament's labour and public enterprise select committee in March last year. Executive Johan Raath said Sentech was excited by plans for it to offer broadband wireless access to all citizens in a scheme designed by Communications Minister Ivy Matsepe-Casaburri.

Sentech would move fast as soon as funding was secured, he said.

But funding was never secured. Instead, cash was allocated to Infraco, a new company created by Public Enterprises Minister Alec Erwin. Erwin says a state-owned entity will make SA's hi-tech sector globally competitive by rapidly supplying broadband at "a genuinely competitive" price. That was supposed to be Sentech's job. Infraco received a budget of R627m. "In the last budget they didn't even mention us," said a source. "Instead, Infraco came in and we thought 'there goes our money'. They don't believe Sentech can do it."

Sadly, government has little reason to trust Sentech's abilities. Its staff say there is no business structure or updated strategy and the top management is a shambles. "The board is like a revolving door. People are resigning in droves and there's an atmosphere of fear," a source says. "Forensic auditors are roaming the place. People are afraid of back-stabbing so they don't make decisions, so everything has to go to the executive committee for approval. But the committee is government appointed and they don't understand the business."

Of the 110 resignations since last year, many were of skilled technicians and managers who could no longer tolerate the poor decisions and wretched atmosphere. Among them was Winston Smith, the product manager for MyWireless. Smith took abuse from consumers angry at the slow speeds and lack of coverage. He defended Sentech admirably, but it was beyond the call of duty.

Equally galling for the managers is that a major bank agreed to lend R1bn to build a national wireless internet backbone. But the treasury refused to let it borrow from the private sector.

"We've come to a stalemate," says an insider. "Government won't give us money and won't let us go to the private sector for funding. Maybe they have plans to sell off the licences and fold the rest back in with the SABC."

Why is government not funding Sentech's broadband roll-out or permitting it to borrow privately? The vetoes indicate neither the public enterprises department nor the treasury support the communications minister's plan to use Sentech as a broadband service provider.

Former director Ben Bets says granting new licences to broaden its revenue and give SA more bandwidth was a sound idea, but telecoms is a long-term, high-investment business.

Despite pleading for cash, Sentech is tackling those new activities without any significant investment.

"It is clear that government as its only shareholder has failed to support Sentech to get a sufficient foothold in the market," Bets says. "To make a major investment in a virtually new broadband wireless network at a time when competition is on the increase and broadband prices are dropping might be a rather risky venture."

The board, including Bets, are "obviously accountable for the continued declining performance".

In 2005, former chairman Stephen Mncube warned that the lack of funds posed a major business risk. The only change since then has been steady deterioration. The internal shambles plays into the hands of government if there are higher plans to retain its signal distribution operations but sell its unsuccessful, yet valuable, multimedia assets and licences to the private sector, or fold them into Infraco.

That may be the plan, but a former employee believes the executives are destroying the business by political ineptitude. They aligned themselves too closely with the communications department and did not notice how its failure to introduce competition in the market was angering the public enterprises department and treasury.

"We know Sentech sucks at business, but I thought politics was what we did. It's just about lobbying and they backed the wrong horse," he says.

If such a plot is under way, Sentech is not aware of it. "Government is considering various funding options. We remain confident of a satisfactory outcome," Ramchander says.

Whether its troubles are being stoked deliberately by withholding cash or the result of incompetence is unclear. But if the chaos is not part of a bigger picture, something has gone sour indeed.