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Portfolio Committee on Communications

ICASA 2007/2008 Annual Report Presentation - 18 November 2008

Paris Mashile, ChairpersonKarabo Motlana, CEO

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Outline of Presentation• Vision• Mission• Strategic Intent• Value Drivers• Strategic Objectives• Licensing & Compliance• Markets & Competition• Engineering & Technology• Consumer Affairs• Legal & Complaints & Compliance Committee• Communication & International Participation• ICASA & its People• 2007/2008 Financial Statements

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Vision

To be a catalyst in the transformation of South Africa into an information-oriented society with a knowledge-based

economy

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Mission

To create a competitive environment for delivering a wide range of high quality communication and postal services at

affordable prices as would assist in overall economic growth and social development of the country

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Strategic Intent

ICASA’s strategic intent are underpinned by the following strategic intent:

– Regulate the communications sector in the public interest

– Position the communications sector as a sector of choice for local and international investors

– Promote universal service access to disadvantaged individuals and communities

– Promote affordability of service for consumers

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Value Drivers

ICASA’s strategic objectives are underpinned by three drivers of value:

– In-depth understanding and effective regulation of the communications sector

– Functional effectiveness

– World class execution of all its functions

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Strategic Objectives

– Increase the availability and quality of electronic communication services to domestic and business users

– Encourage and maintain pro-competitive market through effective competition and transparent regulation

– Develop regulatory policies that promote competition, innovation and investment in services and facilities providing widespread access to ICTs

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Strategic Objectives

– Maximize the net economic and social worth of the sector, including its strategic use as a catalyst for economic, social and technological development in other areas of the economy

– Broaden economic participation in the sector by SMMEs

– Encourage and support the successful introduction of new technologies and services

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Licensing & Compliance

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Licensing• Commenced with the license conversion process

as per the Electronic Communication Act (“ECA”)• Issued five subscription broadcasting licences• Issued 23 community sound broadcasting licences• Granted 16 Underserviced Area Licenses• Registered 84 courier companies• Aligned the South African Post Office

(“SAPO”)licence in terms of the Postal Services Act, as amended

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Licensing• Amended SABC’s licence to allow for

expansion of SABC 1,2,3 to underserviced areas such as Sekhukhune and Eastern District of the Nodal Point areas that fall under government’s intergrated strategy for rural development (ISRDP)

• Amended CKI FM name to Tru FM• Amended Radio Sonder Grense licence to

allow for expansion

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Licensing RegulationsCommenced with the review of the following

Regulations:• Finalised the subscription broadcasting services

regulations (Must Carry Obligations)• Finalised the Universal Access Regulations• Conducted research on the Sport rights

regulations (including Disputes Resolution)• Conducted research on the SA Local Content

regulations• Commenced research on Election broadcasting

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Compliance

• Compiled 60 compliance assessment reports• Undertook 81 visits to assist licencees in

complying with licence terms and conditions• Received 106 broadcasting complaints• 14 matters were referred to the Complaints and

Compliance Committee for consideration

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Compliance• Mobile operators submitted roll-out plans for 268

500 Community Service Telephones (CSTs)• Approved Implementation Plans for internet

connectivity to 2201 :– public schools – rural clinics – further education and training– institution of people with disabilities

• Further approved Implementation Plan for Neotel to roll-out internet connectivity to 2500 public schools and Further Education and Training institutions

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Compliance• Monitored reserved postal areas and the retail

infrastructure roll-out• Verified the location and operations of new postal outlets• Inspected 600 postal outlets• 72 contravention notices were issued• Conducted monitoring process to SAPO compliance

service delivery standards• Conducted public awareness programmes• Received 35 customer complaints against SAPO

resolved 8 complaints and referred the remainder to SAPO for resolution.

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Markets & Competition

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Markets and Competition

• Conducted preliminary market studies and developed draft regulations for markets that the Authority may investigate for purposes of imposing pro-competitive remedies:

– List of markets that the Authority may investigate for purposes of imposing ex ante regulation

– Discussion document, hearings and findings document on Market definition of wholesale call termination

– Discussion document and hearings on wholesale local access and end-to-end leased lines

• Published draft regulations and held hearings on essential facilities

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Markets and Competition

• Published draft regulations and held hearings on Facilities Leasing and Interconnection

• Processed 46 interconnection agreements• Developed draft regulations on Handset Subsidies• Analysed and processed 43 ad-hoc tariff applications• Analysed and approved Telkom’s 2007/8 annual tariff

review

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Engineering & Technology

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Frequency Spectrum

• Prepared and submitted Draft National Radio Frequency Plan to Minister for consideration

• Published invitation to comment on Spectrum Licensing Framework for high demand bands

• Analysed 111 technical requests for broadcasting frequency

• Published Personal Locator Beacon (PLB) and Radio Frequency Identification Device (RFID) radio regulations

• Issued 3351 frequency spectrum licences• Type approved and issued 1613 licences

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Radio Monitoring & Regions• Attended to a number of cross-boarder

interference complaints in Mozambique and Lesotho

• Regional offices confiscated1304 illegal radios and closed 3671 files for non-payment

• Regional offices issued 358 maritime certificates• Conducted 172 high site inspections

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Consumer Affairs

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Consumer Affairs• Published the following regulations:

– Minimum Customer Care Standards and Complaints Handling Procedures

– Code of Conduct for Electronic Communications Services (ECS) and Electronic Communications Network Services (ECNS)

– Constitution of the Consumer Advisory Panel– Minimum Standards for End-User and

Subscriber Service Charter– Code of People with Disabilities

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Consumer Affairs

• Appointed the Consumer Advisory Panel• Conducted public education and awareness

workshops• Extensive consumer awareness drive through

radio and print media• Produced and distributed publicity material on

the mandate of ICASA

Consumer Affairs

• Conducted a publicity drive on Number Portability

• Conducted youth awareness programmes• Conducted extensive consumer

awareness campaigns in rural communities to coincide with International Consumer Rights Day

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Consumer Affairs

• Received 1038 complaints

• Resolved 637 complaints

• 401 complaints remain under investigation

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Legal & CCC

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Legal and Enforcement

• ICASA operates in a highly litigious environment as its decisions are frequently taken on review by agrieved applicants

• The litigation annexure of the Annual Report indicates that ICASA was involved in 13 litigation matters

• Complaints and Compliance Committee adjudicated over 17 matters

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Communications & International Participation

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Stakeholder Management• Media and general enquiries• Hosted Stakeholders Meeting on 08 November 2007 at the Sandton

Sun and Towers• Branded ICASA’s internal & external activities• Placed corporate advertisements/ advertorials in select publications• Exhibited in industry expos such as

– Satcom Africa 2007– Setweek– Futurex– Young Women in ICT exhibition– CRASA Workshops

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International Participation

ICASA participated in:– CRASA (Communications Regulatory Authority of

Southern Africa);– ACRAN/RIARC (African Communications

Regulatory Authority Network); – ITU (International Telecommunications Union);– IIC (International Institute of Communications);

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International ParticipationICASA also participated in:

– PAPU (Pan African Postal Union);– Universal Postal Union Council of Administration

meetings– Bilateral meetings with other regulators i.e.

• Hosted Telecoms Regulatory Authority of Central African Republic

• Hosted National telecommunications Regulatory Authority of Egypt

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International Participation

• ICASA was party to the following:

– The provision of technical assistance to INCM of the Mozambican Regulator on interference issues

– Hosting of the Sudan government on regulation of communications

– Visit to Russia and Netherlands to share experience on broadcasting complaints procedures

– Visit to Tanzania to share experience– The hosting of SA Korean technical team

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ICASA and Its People

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ICASA and its People• Out of 72 critical positions 60 were filled• Bursary scheme provides training to 56 employees• Undertook a Job Grading Review process• Conducted a review of a range of existing internal policies• Implemented an employee assistance programme to

provide a comprehensive professional wellness programme

• Awarded Long Service awards to long serving employees

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DEMOGRAPHICS PER POPULATION GROUP MARCH 2004 TO MARCH 2007

58.00%

70.21%

6.00% 5.01%9.00%

6.78%

26.00%

17.99%

African Asian Coloured White

2004 2005 2006 2007 2008

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STAFF COMPLIMENT AT 31 MARCH 2008 by GENDER

MALE52.51%

FEMALE47.49%

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ICASA 2007/2008 Annual Financial Statements

MAIN STATEMENT: STATEMENT OF FINANCIAL PERFORMANCE

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Note

31 March

2008

R

31 March

2007

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REVENUE

Total grants appropriated 2 212 842 671 190 877 914

Other income 3 9 115 188 11 713 759

221 957 859 202 591 673

EXPENDITURE (224 507 781) (180 359 862) Administrative expenses 4 (29 505 951) (25 173 831)

Staff costs 5 (117 655 847) (93 696 753)

Audit fees 6 (1 002 327) (1 007 998)

Other operating expenses 7 (65 268 901) (53 375 987)

Depreciation 11 (9 970 364) (6 242 176)

Amortisation 24 (1 104 391) (863 117)

(DEFICIT) / SURPLUS FROM OPERATIONS (2 549 922) 22 231 811 Finance income 9 7 587 667 2 523 490 Finance costs 8 (170 491) (356 884) Finance costs - net 7 417 176 2 166 606 SURPLUS FOR THE YEAR 4 867 254 24 398 417

MAIN STATEMENT: STAMENT OF FINANCIAL POSITION

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Note

31 March

2008

R

31 March

2007

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ASSETS

Non-current assets 70 261 738 49 228 309

Property, plant and equipment 11 67 333 193 47 240 601

Intangible assets 24 2 928 545 1 987 708

Current assets 77 042 866 84 677 741

Trade and other receivables 12 1 626 694 2 363 301

Prepayments and advances 13 9 844 335 2 597 795

Cash and cash equivalents 14 65 571 837 79 716 645

TOTAL ASSETS 147 304 604 133 906 050

LIABILITIES

Current liabilities 30 228 742 34 408 616

Trade and other payables 15 14 677 905 20 053 859 Current portion of lease commitments 16 7 950 439 5 567 684 Current portion of finance lease obligations: on 23 590 040 556 292

Provisions 17 7 010 358 8 230 781

Non-current liabilities 92 293 589 79 582 415

Deferred income grants 18 86 678 386 65 046 056 Non-current portion of lease commitments 16 5 387 957 13 676 035 Non-current portion of finance lease obligations: (S

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227 246

860 324

TOTAL LIABILITIES 122 522 331 113 991 031

EQUITY

ACCUMULATED RESERVES 24 782 273 19 915 019

Start-up fund 33 731 342 33 731 342

Accumulated deficit (8 949 069) (13 816 323)

TOTAL EQUITY AND LIABILITIES 147 304 604 133 906 050

NATIONAL REVENUE FUND: STATEMENT OF FINANCIAL PERFOMANCE

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Note 31 March

2008 31 March

2007 R R Licence and Application fees 2 2 098 671 428 2 083 971 981 Expenditure (22 124 246) (25 248 883) Impairment of accounts receivable 3 (21 917 714) (25 013 886) Commission (193 172) (218 967) Bank charges (13 360) (16 030) Net operating income 2 076 547 182 2 058 723 098 Interest income 9 19 036 413 11 553 490 Net surplus for the year 2 095 583 595 2 070 276 588

Funds transferred (2 094 218 201) (2 093 746 511) Licence and Application fees transferred to National Revenue Fund during the year (2 085 174 410) (2 082 155 898) Net interest income transferred to ICASA 8 (9 043 791) (11 590 613 ) Funds accrued/(transferred) for the year 1 365 394 (23 469 923)

NATIONAL REVENUE FUND: STATEMENT OF FINANCIAL POSITION

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Notes 31 March 2008 31 March 2007 R R

Assets Current Assets 671 565 860 550 012 422 Accounts receivables 3 610 284 483 528 271 628 Cash and cash equivalents 4 61 281 377 21 740 794 Total Assets 671 565 860 550 012 422

Liabilities

Current liabilities 671 565 860 550 012 422 Inter-company loans - 1 814 036 National Revenue Fund payables 5 671 565 860 548 198 386 Total liabilities 671 565 860 550 012 422

NATIONAL REVENUE FUND

Licences and application fees for 2007/08 is R2 098 million.

Fees collected:

Collection rate at year end - 82%

Broadcasting - 97%

Spectrum - 85%

Telecoms - 98%

Postal - 99%

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Questions

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Thank You

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