Portfolio Committee on Communications ICASA 2006/2007 Annual Report Presentation

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Portfolio Committee on Communications

ICASA 2006/2007 Annual Report Presentation

Karabo Motlana, CEO

08 November 2007

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Outline of Presentation• Strategic Intent• Value Drivers• Strategic Objectives• Licensing• Competition, Choice and Diversity• Spectrum Management• Legal, Consumer and International Participation• International Participation• ICASA & its People• Financial Statements

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ICASA Strategic Intent

ICASA’s strategic objectives 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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ICASA 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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ICASA Strategic Objectives

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

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

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

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ICASA 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 the economy

– Broaden economic participation in the sector by SMMEs

– Encourage the injection of capital by domestic and foreign investors

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

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Licensing

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Licensing

• Licensed 81 Value Added Network Service operators

• Issued 3 Under-serviced Area Licences• Granted six Under-serviced Area Licences

subject to provision of additional information• Renewal of the SABC licences for XK FM and

the amendment of Umhlobo Wenene FM• Renewal of commercial broadcasting 702 Talk

Radio and Midi TV

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Licensing

• Licensed 81 VANs• Licensed 15 PTNs• Issued 3 USALs• Granted 6 USALs subject to provision of

additional information• Renewed XK FM and amended Umhlobo

Wenene FM (SABC)• Renewed 702 Talk Radio and Midi TV licences

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Licensing

• Amended commercial broadcasting licence for Khaya FM and 702 Talk Radio

• Licensed 3 new commercial radio stations for Limpopo, Mpumalanga, and North West for the secondary markets

• Granted 11 new Community Sound Broadcasting licences to nodal areas

• Issued 28 Special Events Community Broadcasting licences

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Licensing• Amended Kaya FM and 702 Talk Radio licences• Licensed 3 commercial radio stations in Limpopo,

Mpumalanga and North West provinces• Granted 11 Community Sound Broadcasting

licences• Issued 28 Special Events Community

Broadcasting licences• Renewed 9 Community Broadcasting licences• Amended 3 Community Sound Broadcasting

services

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Competition, Choice and Diversity

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Markets and Competition• Processed numbering applications 266• Published an updated Central Numbering Database• Implemented Mobile Number Portability• Finalised the Mobile Number Portability Code of

Practice• Published number portability geographic functional

specifications for Public Switched Telecommunication services – GG29028 d/d 12/07/06

• Published 10 digit plan records and changing international dialling prefix – GG29049 d/d 20/06/06

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Markets and Competition

• COA/CAM for Mobile and Fixed Telephony operators– Authority requested regulatory financial

statements from mobile operators in order to analyse the cost of providing mobile telephony

– Authority received Telkom’s audited financial statements

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Markets and Competition

• Conducted an enquiry into Handset Subsidy• Conducted an enquiry into the Interconnection

and Facilities Leasing Regulations• Completed a Market Intelligence Study• Initiated a Market Definition process

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Markets and Competition• Published the findings document on Mobile

Pricing• Evaluated SAPO annual tariff increase proposals

• Published approved fees and charges for the

reserved postal area• Developed a Code of Practice for postal

operators in the un-reserved sector (courier companies)

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Markets and Competition• Conducted a Ten-year Review of Broadcasting

Regulation• Published a Code of Good Practice for broadcasting on

providing services to people with disabilities• Conducted research on the programming for children,

the youth, women and people with disabilities.• Published a Community Sound Broadcasting Policy

Position Paper – GG 28919 d/d 06/06/06• Participated in Digital Migration Strategy

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Spectrum Management

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Frequency Spectrum

• Issued over 5000 radio spectrum licences• Issued 88 300 radio spectrum licences• Issued 169 TLTE licences• Issued 52 switching systems licences• Type approved over 900 radio frequency

equipment• Conducted frequency spectrum audit on 2.5

GHz

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Spectrum Management– 800 MHz broadcasting opened for non-broadcasting

services on a secondary basis – GG 29345– Published Personal Locator Beacon (PLB) regulations

for use in emergencies – GG 26514– Published discussion document on framework for

assigning high demand frequency bands- Hearings conducted – GG 29667

– Published draft regulations on the use of RFID systems – GG 30280

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Frequency Monitoring

• Spectrum Compliance– Confiscated 76 illegal radio transceivers– Closed down 2 illegal broadcasters were– Issued warnings to un-licensed operators

on the ISM band– 67% of interference cases resolved

• 200 High sites inspected

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Legal, Consumer and International Participation

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Consumer Protection• Conducted public awareness on:

– Universal Service and Access; – Consumer Rights; – Competition and Choice; – Services available to People with

Disabilities;– Number Portability; and – E-rate

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Consumer Complaints

• 924 Complaints received

• 697 Complaints resolved

• 245 Complaints brought forward

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Monitoring Broadcasters

• Conducted 64 compliance assessment visits

• Received 75 broadcasting complaints

• BMCC adjudicated over 3 hearings

• Issued 60 monitoring reports

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Monitoring Postal Outlets

• Monitored reserved postal areas• Monitored the retail infrastructure roll-out• Verified the location and operations of new

postal outlets• Enforced compliance with postal legislation• Undertook the Independent Monitoring Project to

ensure postal service delivery standards• Conducted public awareness programmes• Resolved customer complaints against SAPO

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Legal and Enforcement

• Received and adjudicated complaints against broadcasters

• Conducted complaints hearings against three broadcasters

• Conducted the inauguration of members of the CCC which replaced the Broadcasting Monitoring and Complaints Committee

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Legal and Enforcement

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

• The litigation annexure of the Annual Report indicates that ICASA was involved in 15 litigation matters

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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 Participation

ICASA also participated in:– SABA (Southern African Broadcasting Association);– UPU (Universal Postal Union);– SAPRA (Southern African Postal Regulatory

Authority); and held– Bilateral meetings with other regulators i.e.

• Mozambique Communications Regulator on tracing illegal operators/interference

• Hosted Gambia, Sudan, Angola and Chinese delegations

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International Participation

• ICASA hosted/ co-hosted the following:

– Commonwealth Telecommunications Organisations’ (CTO) Digital Broadcasting Switch-Over Conference

– 5th World Summit on Media for Children

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ICASA and Its People

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Stakeholder Management

• Media and general enquiries

• Hosted Stakeholders Meeting

• Branded ICASA’s internal & external activities

• Placed corporate advertisements/ advertorials in select publications

• Exhibited in industry expos

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ICASA and its People

• Postal Regulator Staff were integrated into ICASA on 01 January 2007

• Implementation of a Performance Review Process

• Initiated a Job Grading and Salary Benchmarking

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55.9%

60.0%

65.80%

66.90%

6.6% 6.4% 5.70%

5.60%

9.2% 8.1% 7.60%

6.60%

28.3%

25.5%

20.90%

20.90%

African Asian Coloured White

2004 2005 2006 2007

DEMOGRAPHICS PER POPULATION GROUP MARCH 2004 TO MARCH 2007

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FEMALE47%

MALE53%

DEMOGRAPHICS PER GENDER GROUP MARCH 2004 VS MARCH 2007

FEMALE45%

MALE55%

MARCH 2007MARCH 2004

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ICASA 2006/2007 Annual Financial Statements

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Statement of Financial Performance

31 March

2007 R

31 March 2006

R

REVENUE Total grants appropriated 2 190 877 914 159 174 178 Surplus on disposal of property, plant and equipment

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-

239 748

Other income 4 123 146 - 191 001 060 159 413 926 EXPENDITURE (180 716 746) (176 557 156) Administrative expenses 5 (25 173 831) (23 232 865)

Staff costs 6 (93 696 753) (88 540 792)

Audit fees 7 (1 007 998) (944 807)

Other operating expenses 8 (53 534 573) (59 759 080)

Depreciation 12 (6 242 176) (3 340 748)

Amortisation 25 (863 117) (679 360)

Finance costs 9 (198 298) (59 504)

SURPLUS / (DEFICIT) FROM OPERATIONS

10 284 314

(17 143 230)

Interest income 10 14 114 103 11 260 152 SURPLUS / (DEFICIT) FOR THE YEAR

24 398 417

(5 883 078 )

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Statement of Financial Position 31 March

2007 R

31 March 2006

R

ASSETS

Non-current assets 49 228 309 41 221 366

Property, plant and equipment 12 47 240 601 39 194 337 Intangible assets 25 1 987 708 2 027 029

Current assets 84 677 741 58 466 274 Trade and other receivables 13 2 363 301 4 001 719 Prepayments and advances 14 2 597 795 346 819 Cash and cash equivalents 15 79 716 645 54 117 736 TOTAL ASSETS 133 906 050 99 687 640

LIABILITIES

Current liabilities 34 408 616 30 513 494

Trade and other payables 16 20 053 859 17 154 598 Current portion of lease commitments 17 5 567 684 3 145 886 Current portion of finance lease obligations: non current (S

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556 292

-

Provisions 18 8 230 781 10 213 010 Non-current liabilities 79 582 415 73 657 544 Deferred income grants 19 65 046 056 54 385 681 Non-current portion of lease commitments

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13 676 035

19 271 863

Non-current portion of finance lease obligations: non current (S

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860 324

-

TOTAL LIABILITIES 113 991 031 104 171 038 EQUITY

ACCUMULATED RESERVES 19 915 019 (4 483 398) Start-up fund 33 731 342 33 731 342 Accumulated deficit (13 816 323) (38 214 740) TOTAL EQUITY AND LIABILITIES 133 906 050 99 687 640

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NATIONAL REVENUE FUNDStatement of Financial Performance for the year ended 31 March 2007 Notes 31 March 2007 31 March 2006 R R Licence and Application Fees 2 2 121 114 457 1 826 976 601

Expenditure (25 029 916) (22 537)

Impairment of accounts receivables 3 (25 013 886) (1 150) Bank charges (16 030) (21 387)

2 096 084 541 1 826 954 064

Interest income 11 606 643 10 812 341

2 107 691 184 1 837 766 405

Funds transferred (1 725 297 144) (1 455 223 367) Licence and Application fees transferred to National Revenue Fund during the year 6 (1 713 706 531) (1 444 432 413) Net Interest income transferred to ICASA (11 590 613) (10 790 954)

Funds accrued to the year 382 394 040 382 543 038

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Statement of Financial Position Statement of Financial Position for the year ended 31 March 2007 Notes 31 March 2007 31 March 2006 R R

Assets

Current Assets 427 282 328 446 067 937

Accounts receivables 3 405 541 534 402 737 880

Cash and cash equivalents 4 21 740 794 43 330 057

Total Assets 427 282 328 446 067 937

Liabilities

Current liabilities 427 282 328 446 067 937

Inter-company loans 1 814 036 1 824 316 National Revenue Fund payables 5 425 468 292 444 243 621

Total liabilities 427 282 328 446 067 937

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NATIONAL REVENUE FUND

• Licences and application fees increased from R1.8 billion to R2.1 billion which is 16% increase. This 14% is due to increase in telecommunication service’s “net operation income licence fees”.

• Fees collected:Collection rate at year end - 85%Broadcasting - 84%Spectrum - 76%Telecoms - 98%Postal - 99%

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Thank You

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