Presentation to the Presentation to the Portfolio Committee on CommunicationsPortfolio Committee on Communicationson the ICASA 2006 Annual Reporton the ICASA 2006 Annual Report

Presented by: Stanley MamareganeActing General Manager: LCCDate : 03 November 2006

22

Outline of PresentationOutline of Presentation

Policy Objectives

Achievements of the year 2005/2006

Monitoring and Enforcement

Consumer Protection

International Participation

Stakeholder Management

Corporate Governance

ICASA & its People

Litigation

Financial Statements

33

POLICY OBJECTIVES

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Policy Objectives (1)Policy Objectives (1)

Promoting affordable delivery of services and universal access

Encouraging investment in the communications sector within a stable and regulatory regime

Encouraging the development of a competitive and effective communications sector

Promoting and facilitating convergence of telecommunications, broadcasting and information technology

55

Policy objectives (2)Policy objectives (2)

Fostering the development of public, commercial and community broadcasting services that are responsive to the needs of the people

Promoting the provision of a diverse range of sound and television broadcasting services on a national, regional and local basis

Bridging the Digital Divide

66

Achievements for the

Year 2005/2006

77

Promoting Universal AccessPromoting Universal Access

ICASA issued licences & published policy documents in execution of its mandate to promote community access to basic telephony & broadcasting services

Underserviced Area Licences (USALs):– Seven USAL Licences were granted– ITA for phase 2 was issued– 42 applications were lodged– Public hearings and deliberations were conducted

in 14 areas– Recommendations were forwarded to the Minister– Minister published ITA for the third phase

88

Promoting Universal Access cont.Promoting Universal Access cont.

Promulgated Numbering Plan Regulations

Installed a Central Number Database (CNDB)

Published Position Paper on the Regulation of Commercial Subscription Broadcasting Services

Published Discussion Paper on the Review of the Regulatory Framework on Community Sound Broadcasting Policy

Published Position Paper setting new policy and licensing framework on the Regulation of Self Help Station

99

Promoting Universal Access cont.Promoting Universal Access cont.

Participated on the DoC initiative to develop Digital Migration/Transition Strategy

Issued final amendment licence conditions, bringing the SABC in line with all other broadcasters

Granted SABC 4 & 5 application for regional television services but not issued, subject to SABC furnishing sufficient proof for funding

1010

Promoting Economic Growth & Job CreationPromoting Economic Growth & Job Creation

Issued licence to Second National Operator (Neotel)

Embarked on a licence amendment process to create an equitable environment between Telkom & the SNO

Drafted Regulations to create a framework for Value Added Network Services (VANS). To date the Authority has issued 331 VANS licenses

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Promoting Economic Growth & Job Creation Promoting Economic Growth & Job Creation cont.cont.

Issued :

41 Private Telecommunication Network (PTN) Licenses

Frequency Spectrum in the 1800 MHz band to mobile operators who have undertaken to provide SIM Card connection services and terminal equipment to be used for disadvantaged communities

2 mobile operators with 3G licenses, each subject to providing internet access to 5000 schools, 140 institutions for people with disabilities and 1400 terminals for people with disabilities

Over 5000 new frequency spectrum licenses

1212

Promotion Competition, Choice & DiversityPromotion Competition, Choice & Diversity

Undertook review of COA/CAM for Mobile Operators and Public Switched Telecommunication Services (PSTS)

Implemented Rate Regime Regulation

Published Mobile Pricing Discussion Document and held hearings

Held Enquiry into Handset Subsidies

Consolidated Interconnection and Facilities Leasing Guidelines

1313

Promoting Competition, Choice & Diversity cont.Promoting Competition, Choice & Diversity cont.

Broadcasting:

Amended 9 Broadcasting licences within the categories of community, commercial and public broadcasting services

Approved the establishment of 37 new Television Self-Help Stations

Terminated M-Net’s “open window”

Published ITA for Commercial Sound Broadcasting Licenses in Secondary Markets

1414

Promoting Competition, Choice & Diversity cont.Promoting Competition, Choice & Diversity cont.

Broadcasting:

In response to the ITA for four years community sound broadcasting licences in the nodal point areas - 4 Applications were received for stations in urban areas and 15 applications for stations in rural areas. Hearings held in March and April 2006

Granted 40 special events license applications, 9 applications were refused

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MONITORING AND ENFORCEMENT

1616

Monitoring & EnforcementMonitoring & Enforcement

ICASA monitors compliance with licence conditions by communications service providers and adjudicates complaints:

– 163 monitoring reports were produced

– Conducted 35 monitoring visits

– Received 69 complaints

1717

Monitoring & Enforcement cont.Monitoring & Enforcement cont.

The Broadcasting Monitoring and Complaints Committee adjudicates complaints in the broadcasting sector referred to it by ICASA – 5 licensees appeared before the BMCC

ICASA monitored the broadcaster’s coverage of the 2006 Local Government Elections

ICASA enforces compliance by spectrum users. Inspections, monitoring, interference investigations & maritime audits were conducted

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Setting Technical StandardsSetting Technical Standards

ICASA issues type approval certificates and licenses on communications equipment based on acceptable standards for performance and safety

Amateur Radio Regulations were developed

1919

CONSUMER PROTECTION

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Consumer ProtectionConsumer Protection

Outreach programmes on consumer education are aimed at informing communities about ICASA’s regulatory activities and their rights as consumers

In order to provide access to information for the visually impaired, some of the education material is produced in braille

Road shows were held in all Provinces

Conducted 93 Community Radio Interviews

A number of consumer complaints were received, analysed and resolved

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Consumer Protection cont.Consumer Protection cont.

Research was done on Telkom’s Public Pay Phones

Conducted workshops together with mobile operators, fixed operators and organisations representing people with disabilities, aimed at educating disabled people on available services

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INTERNATIONAL PARTICIPATION

2323

International ParticipationInternational Participation

ICASA participates actively in:

TRASA (Chairs two specialist committees and Executive Committee Member)

ACRAN/RIARC (Served as Chair)

ITU

Broadcasting related meetings and events

Bilateral meetings with other regulators i.e. Federal Communications Commission and Ethiopian Broadcasting Authority

2424

International Participation cont.International Participation cont.

Assistance was provided to:

Lesotho Telecoms Authority on their spectrum project

Square Kilometre Array (SKA) Project by terrestrial interference surveys

Hosting of visiting delegations for information sharing

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STAKEHOLDER MANAGEMENT

2626

Stakeholder ManagementStakeholder Management

ICASA held the following stakeholder events:

Commissioning and re-designing of ICASA’s website

Stakeholder meeting on ICASA’s readiness to implement the ECA

Hosting of international visitors

Participating in industry exhibitions

Public participation through hearings for all policy and regulation development processes

2727

CORPORATE GOVERNANCE

2828

Corporate GovernanceCorporate Governance

Council plays a strategic leadership, regulatory, adjudicatory and oversight role

Councillors sign a Code of Conduct which defines the standards and integrity that they must maintain

Committees of Council are established to assist Council in the exercise of its powers & functions

An in-house Internal Audit function is established

New initiatives to improve corporate governance

2929

Corporate Governance cont.Corporate Governance cont.

A Risk Management Committee was established to identify and investigate risks

A Bid Committee considers bids for the procurement of goods & services. The functions of the Bid Committee are underpinned by the provisions of the PFMA & PPPF Act

ICASA is in the process of developing a Council Charter and a Performance Management System for Council

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ICASA AND ITS PEOPLE

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58.0%

60.0%

65.80%

6.0% 6.4% 5.70%9.0% 8.1% 7.60%

26.0% 25.5%

20.90%

African Asian Coloured White

2004 2005 2006

DEMOGRAPHICS PER POPULATION GROUP MARCH 2004 - MARCH 2006

3232

FEMALE46%

MALE54%

DEMOGRAPHICS PER GENDER GROUP MARCH 2005 VS MARCH 2006

FEMALE45%

MALE55%

MARCH 2005MARCH 2004

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ICASA & its PeopleICASA & its People

Due to an incomplete roll-out of ICASA Performance Management System, ICASA Staff were rewarded with an amount of R8500,00 each for performance in 2006

ICASA reached with the Communication Workers Union to pay an increase of 8,5% to all staff members below management level and 7% to members at management level within the bargaining unit

ICASA has embarked on a drive to fill in vacant posts

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LITIGATION

3535

LitigationLitigation

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 25 litigation matters

The Registrar of Trade Marks approved ICASA logo as a trade mark

3636

ICASA 2005/06 Annual Financial StatementICASA 2005/06 Annual Financial Statement

3737

Statement of Financial PerformanceStatement of Financial Performance

Notes

31 March

2006

R

31 March

2005

R Revenue Transfer and subsidies received Total subsidies appropriated 2 144 489 000 141 586 833 Surplus on disposal of fixed assets 239 748 50 886

Total Revenue 144 728 748 141 637 719 Expenditure (178 605 557) (153 262 356) Administrative expenses 3 23 232 865 14 931 457 Staff costs 4 88 540 792 76 741 518 Audit Fees 5 944 807 1 430 151 Project expenses 5 218 605 6 495 879 Other operating expenses 6 54 540 475 48 567 409 Depreciation 20 6 068 509 4 919 832 Finance Costs

7 59 504

176 110

Deficit from Operations (33 876 809) (11 624 637) Interest received 11 260 152 14 486 995 (Deficit)/Surplus after Income from Investments

(22 616 657)

2 862 358

Amounts transferred from/(to) government grants deferred income

16 733 579

(12 953 093)

-long term projects - 10 123 241 -capital expenditure 16 733 579 (23 076 334) Deficit for the Year (5 883 078) (10 090 735)

3838

Statement of Financial PositionStatement of Financial Position

Notes 31 March 2006

R

31 March 2005

R

ASSETS Non-current assets Property, plant and equipment 20 14 735 607 15 121 190 Current assets 101 796 331 107 760 583 Trade and other receivables 11 4 001 719 4 433 012 Prepayments and advances 12 346 819 1 854 787 Cash and cash equivalents 13 54 117 736 74 450 945 National Revenue Fund administered assets 22 43 330 057 27 021 839

116 531 938 122 881 773 LIABILITIES

Current Liabilities 73 843 551 60 562 769 Trade and other payables 14 17 154 598 20 817 803 Current portion of lease commitments 15 3 145 886 1 082 987 Provision 21 10 213 010 11 640 140 National Revenue Fund creditor 22 43 330 057 27 021 839 Non - Current liabilities 58 859 474 72 607 013 Deferred income - government grants 16 39 587 611 50 321 190 Non –current portion of lease commitments 15 19 271 863 22 285 823

132 703 025 133 169 782 Accumulated Reserves (16 171 087) (10 288 009 Start-up fund 17 33 731 342 33 731 342 Accumulated Deficit 17 (49 902 429) (44 019 351) 116 531 938 112 881 773

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Statement of Changes in Net AssetsStatement of Changes in Net Assets

Notes

Accumulated

Deficit

R

Start up Fund

R

Total

R

Balance at 31 March 2004 – as previously reported (24 451 434) 33 731 342 9 279 908 Cash Operating lease restatement 17 (15 995 836) - (15 995 836) Balance at 31 March 2004 – as restated (40 447 270) 33 731 342 (6 715 928 Deficit for the year – as restated (10 090 735) - (10 090 735) Surplus for the year as previously reported 1 934 163 - 1 934 163

Fundamental error – provision for VAT penalty reversed in error

(4 651 924)

-

(4 651 924)

Operating lease restatement 17

(7 372 974)

-

(7 372 974)

(50 538 005) 33 731 342 (16 806 663)

Prior year adjustments 6 518 654 - 6 518 654 Balance at 31 March 2005 – as restated (44 019 351 33 731 342 (10288 009 Deficit for the year 17 (5 883 078) - (5 883 078 Balance at 31 March (49 902 429 33 731 342 (16 171 087

4040

Cash flow StatementCash flow Statement

Notes

31 March

2006

R

Restated 31March

2005

R

Cash flows from operating activities Cash received, being government grants 150 489 000 128 633 740 Cash paid to employees and suppliers (176 579 679)` (116 173 803) Cash(utilised in)/generated from operations 23 (26 090 679) 12 459 937 Interest income 11 260 152 14 486 995 Interest paid (59 504) (176 110) Net cash (outflows)/inflows from operating activities (5 443 178) (5 586 158) Acquisition of property, plant and equipment 20

(5 682 926) (5 692 605)

Proceeds on disposal of property, plant and equipment 239 748 106 447

Net increase / (decrease) in cash and cash equivalents (20 333 209) 21 184 664 Cash and cash equivalents at the beginning of the year 74 450 945 53 266 281 Cash and cash equivalents at the end of the year 13 54 117 736 74 450 945

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THANK YOU