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Briefing to the Parliamentary Portfolio Committee on Communications

“2016 – 17 FY Annual Report”

Contents

Organisational Mandate

Strategic Fit - Government’s Priority Outcomes

Strategic Outcome Oriented Goals: 2015/16 – 2019/20

Performance Summary 2016/17FY

Key Achievements by Programme

Key Non-Achievements by Programme

Human Resources

Governance

Complaints and Compliance Committee

AG Audit Outcome 2016/17 Financial Year

End

2

Organisational Mandate

3

ICASA is established pursuant to section 192 of the Constitution and in terms of the ICASA Act of 2000, as amended

Regulate electronic communications, broadcasting and postal sectors in the public interest

Ensure affordable services of high quality for all South Africans

ICASA is mandated to -

ICASA’s mandate is derived from:

The Constitution, 1996

ICASA Act, 2000

EC Act, 2005

Broadcasting Act, 1998

Postal Services Act, 1998

ECT Act, 2002

Strategic Fit - Government’s Priority Outcomes

4

Outcome 6:

An efficient, competitive and responsive

economic infrastructure network

Outcome 12:

An efficient, effective and development–

oriented public service

Outcome 14:

A diverse, socially cohesive society with a

common national identity

Government Long-Term Plans and Priority Outcomes

Promote competition and networkdeployment for universal broadbandprovision

Ensure that the regulatory frameworkfacilitates the use of ICTs as a platform toprovide increased access to governmentservices

Facilitate the 3-tiers of broadcasting andspecifically focus on a regulatoryagenda that:

• Promotes local content• Dissemination of information

in the public interest• Public broadcasting content

across all platforms

NDP 2030

(Strategic Outcome Oriented Goals)

Strategic Goals: 2015/16-2019/20

6

1. Universal Access to Broadband

2. Access to Communication

Services at Affordable Prices

3. Improve Organisational Service Delivery

4. Common National

Identity and Social Cohesion

ICASA Services to the Sector

ICASA

Services to licenseesSpectrum

AssignmentInterconnection / Facilities Leasing

Type Approval& Allocation of

numbers

Issue registration certificates

Licences & Channel

Authorisations

Universal service obligations

Diversity of local Content

Quality of

Service

Speedy resolutions of

Complaints

Competitive pricing

Services to end-users & audiences

Performance Summary

Performance Summary by ProgrammeProgramme Outputs Achieved Outputs Not Achieved Total Outputs Planned

Licensing 10 2 12Policy Research & Analysis

1 3 4Engineering & Technology

5 3 8Regions 5 0 5Compliance and Consumer Affairs 7 2 9Corporate Services 5 0 5Finance 3 2 5Human Resources 2 2 4Internal Audit 3 1 4Legal Risk Complaints & Compliance Committee 3 0 3TOTAL 44 15 59PERCENTAGES 74. 5% 25.5% 100%

Expenditure Summary by Programme

10

Chief Operations Officer (Regulatory Projects Office)

Programmes Summary Report - March 2017

Programme

2016/17 2015/16

Budget Actual

(Over)/Under

Expenditure Budget Actual

(Over)/Under

Expenditure

Programme 1:

Administration 243 856 565 253 923 169 (10 066 604) 298 564 781 283 849 569 14 715 212

Programme 2:

Licensing 45 838 825 47 383 950 (1 545 126) 48 060 711 59 507 485 (11 446 774)

Programme 3:

Engineering &

Technology 16 646 472 16 169 488 476 985 31 749 824 12 053 979 19 695 845

Programme 4: Policy

Research & Analysis 23 505 032 20 703 133 2 801 899 33 808 918 18 738 856 15 070 062

Programme 5:

Compliance &

Consumer Affairs 28 432 858 29 657 835 (1 224 977) 9 728 783 11 682 321 (1 953 538)

Programme 6: Regions 70 011 109 61 490 254 8 520 855 0 0 0

TOTAL 428 290 860 429 327 829 (1 036 969) 421 913 017 385 832 210 36 080 807

Reasons for Over Expenditure

11


Actual operational expenditure (OPEX) was R406 108 867 (2.4%) less as compared to the budget amount of R416 248 585.

Normal projects actual spending of R 20 561 605 was R8 556 152 (70.7%) more to the budget of R 12 042 276, the below were mainlythe cause for the over spending: -

1. The project – ‘Local Elections Monitoring’ head count costs for the officers who were temporarily employed initially budgetedwith lower scale packages and were actually salaried with higher scales going over by R 5 369 839.

2. The projects – ‘Quality of Service(QoS) Monitored’ and ‘ Frequency Migration strategy/plan and updated National Band Planand reviewed broadcasting plan’ both were under budgeted for resulting in in over spending of R1 663 826.

3. The number of small projects under support division make up balance of the remaining amount of R1m.

4. The actual amount incurred during the current financial is inclusive of the prior year accruals paid during the current financialyear.

The over expenditure on repairs and maintenance was mainly due to the following:

1. Additional expenditure of R 221 782 incurred for repairs on old motor vehicles2. Additional expenditure of R 901 256 incurred for maintenance of monitory equipment..

Achievement by

Programme

Programmes for 2015/16-2019/20FY

1.Administration

Purpose:

To provide

coordinated

strategic

leadership,

management and

support to the

organisation to

deliver on its

mandate

2.Licensing

Purpose

To authorize,

issue, renew,

transfer and

revoke all types

of licence within

its jurisdiction for

the purpose of

socio-economic

development

and promotion

of competition

4. Engineering & Technology

Purpose

To research on

radio frequency

spectrum, type

approval and

technical

standards to

provide support

to ICASA

Programmes as

needed

3. Policy Research & Analysis

Purpose

To conduct

research and

policy analysis

into all the

regulatory

sectors in line

with ICASA

mandate

5. Regions

Purpose

To enable

unimpeded

national provision

of electronic

communications,

broadcasting and

postal services

through compliance

and enforcement

6. Compliance & Consumer Affairs

Purpose

To ensure licences

compliance with

terms and

conditions of their

licences, regulations

and requirements

and protect interest

of consumers

Programme 1: Administration - Achievements

14


• Systems and processes integration from 30% to 50%

• Increased ICASA communication reach from 10% to 40% on availablecommunication platforms

• Increased safety and OHS from 50% to 60%

Corporate Services

• Revenue collected R98 4921 674.00 on all invoices (99%)

• Support to Programmes increased from 88% to 95%Finance

• Increase in talent sourcing from 20% to 50%

• Increase in employee interventions from 20% to 50%Human Resources

Internal Audit

Legal, Risk & CCC

• Audit plan completed from 84% to 85% • 12 Issues tracking reports produced • Assurance reports increased from 1 to 4

• Repository for analysed legal opinions and case law complet from 0 to 50%

• Increase in risk maturity level from 1 to 2 beyond planned target • SLA agreement completion increased from 20% to 50%

Programme 2: Licensing - Achievements

15


• IMT Spectrum ITA published

• Regulation on exempted devices completed

• Regulation on Premium Rated Services completed

Universal Access to Broadband

• Public hearings and deliberations on number portability regulation completed

• Licensing process for commercial sound broadcasting in the Northern Cape completed

• Increase in type approval applications processed within 30 days from 18% to 65%

• Increase in numbering applications from 94% to 96%

• Increase in individual service licences amendments, transfers & control processed from 88.9% to 100%

• Increase in new, amendments, transfer & control of spectrum licensing applications from 81% to 97.7%

• ITA for Free To Air Commercial Television Broadcasting published

Access to Communication


Programme 3: Policy Research & Analysis - Achievements

16


• Draft community broadcasting regulatory framework published

Access to Communication Services at Affordable

Prices

Programme 4: Engineering & Technology - Achievements

17

Chief Operations Officer (Regulatory Projects Office) • Updated National Radio Frequency Plan approved

• Final regulations on E-band and V-band publishedon 22 November 2016


• Updated and redefined broadband maps andinfrastructure maps published on ICASA website

• Quality of Service measured distance increasedfrom 5600km by 15%

• 100% of spillover cases resolved within 60days

Improve OrganisationalService Delivery

Programme 5: Regions - Achievements

18


• An additional ICASA regional office opened inLimpopo

• Additional ECS/ECNS class licence processed inregional offices

• Increase in resolution of interference cases from90% to 92.5%

Improve OrganisationalDelivery

• Increase in consumer awareness from 0 to 5%

• All NATJOINTS instructions received executedCommon National Identity

and Social Cohesion

Programme 6: Compliance & Consumer Affairs - Achievements

19


Access to communication services at affordable

services

• RIA recommendations implemented

• Consumer Advisory Panel published

• 3 ECS/ECNS compliance reports published

• Consumer protection strategy and implementation plancompleted

• Increase in consumer complaints resolution from 75% to80%


Common National Identity and Social Cohesion

• A compliance reported published on Municipal elections

• A discussion document produced on ownership and control regulations on equity ownership and BBEEE

Non-Achievement by Programme

Programme 1: Administration - Non- Achievements

21


• 87% against 95% target ( 1 447 suppliers paid out of 1 646suppliers’ invoices received)

• 71% against 100% target (197 SMMEs paid out of 277 SMMEinvoices received within 15 days

Finance

• 25% of Performance Management & OrganisationalDevelopment strategy implemented against a target of 50%.Consultation process took longer than expected

• 33% of HRD initiatives implemented against a target of 50%.Consultation process took longer than expected

Human Resources

Internal Audit• Compliance monitoring not completed. Data Analytics

position took longer than expected to fill due to the poorlevel of candidates interviewed

Programme 2: Licensing – Non-Achievements

22


• Licensing of 45% of MUX not completed. ICASA decided to extend the submission deadline on the request by the qualifying applicant


Programme 3: Policy Research & Analysis – Non-Achievements

23


• Study on definition of priority markets that are susceptible toex-ante regulation. Council approved the publication of thenotice to conduct market inquiry. There was a delay inprocurement of the service provider.

Access to Broadband Spectrum

Access to Communication


• Discussion Document on subscription broadcasting marketwill be published in May 2017. The project experiencedunexpected delays at the information gathering stage.

• Draft regulations on call termination. Published a noticeand a questionnaire to conduct the review of 2014procompetitive remedies

Programme 4: Engineering & Technology – Non- Achievements

24


• 5G forum establishment. On 6 September 2016 Councilapproved the terms of reference for the establishment ofthe 5G Forum. Invitation letters were sent to potentialparticipants. Only 25% responded

• Research report on TV White Spaces regulations. Tworesearch reports have been produced by CSIR for ICASA. Thisrepresents 75% achievement of the target.


• Decrease turnaround time on type approval andspectrum licensing. 35% progress has beenachieved. The target was unrealistic in terms ofthe project plan


Programme 6: Compliance & Consumer Affairs – Non -Achievements

25


• Obligations imposed for broadcasting ECS/ECNSand postal services from 4 licenses to 7. Draft USOamendments published, comments received.

Access to Broadband Spectrum

Improve organizational Service Delivery

• Final code for persons with disabilities regulations.Decision to publish a further draft Code for Personswith Disabilities for public comments extended theproject beyond the 2016-17FY

Human Resources

Personnel by Population Group

27


Personnel Cost by Division

28


Headcount and Vacancies per Occupational Level

29


Employment Changes and Attrition Reasons

Governance

Council Members during the Year under review

• Mr Rubben Mohlaloga• Ms Katharina Pillay (term of office ended on 11 February 2017)

• Mrs Nomvuyiso Batyi (term of office ended on 11 February 2017)

• Ms Botlenyana Mokhele• Dr Keabetswe Modimoeng• Mr Paris Mashile• Mr Peter Zimri

Council Committees Members’ Meetings Attendance

Complaints and Compliance Committee

Number of Complaints Adjudicated And Attendance

AUDIT OUTCOME2016-2017

PRESENTED BY CFO: TEBOGO MATABANE

STATEMENT OF FINANCIAL POSITION

37

R thousand '000 2016/2017 2015/2016

Assets

Current Assets 1 577 824 332 1 467 764 143

Non Current Assets 141 387 075 120 917 867

Total Assets 1 719 211 407 1 588 682 010

Liabilities

Current Liabilities 1 416 210 251 1 306 163 718

Non Current Liabilities 1 326 074 2 435 036

Total Liabilities 1 417 536 325 1 306 163 718

Accumulated surplus 301 675 082 282 518 292

The Authorities assets exceeded it liabilities by R 301 675 082, the request to retain the surplus was approved by National Treasury.

STATEMENT OF FINANCIAL PERFORMANCE

38

R thousand '000 2016/2017 2015/2016

Revenue

Revenue from non exchange transactions 431 817 003 418 830 737

Revenue from exchange transactions 23 941 973 22 068 699

Total revenue 455 758 976 440 899 436

Expenditure

Employee-related costs 254 667 868 220 962 647

General expenses 174 691 365 164 044 161

Total expenditure 429 327 827 384 864 811

Surplus for the year 26 431 149 56 034 625

AG’s Assessment of 2016/17FY Performance

39

UN

QU

ALI

FIED

AU

DIT

Internal Control Deficiencies

[74.5 %] Organisational Performance

Achievements for 2016-17 Financial Year

40

Unqualified with findings

2014-15 2015-16 2016-17

Types of audit outcomes

Unqualified with no findings

Unqualified with findings

Qualified with findings

Adverse with findings

Disclaimed with findings

Achievements for 2016-17 Financial Year

41

Risk areas

Quality of submitted financial statements

Quality of submitted

performance information

Supply chain management

Financial health

Human resource

management

Information technology

Good Concerning Intervention required

Audit Report Issues

42

Audit Report Audit Report matter: Non compliance on;

2015-2016

Unqualified

1.Usefulness of reported performance information - Programme 1: Policy Research and Analysis, Programme 2:Regions, Programme 3: Licensing, Programme 4: Compliance and Consumer Affairs & Programme 9: Legal, Riskand CCC;

2.The constitutional institution did not have a proper record management system to maintain information thatsupported the reported performance in the annual performance report; and

3. Irregular and fruitless and wasteful expenditure.

Audit Report Issues

43


2016-2017

Unqualified

1.The financial statements submitted for auditing were not prepared in accordance with the prescribed financialreporting framework as required by section 40(1) (b) of the PFMA Material misstatements of non-current assets,current assets and disclosure items identified by the auditors in the submitted financial statement were corrected,resulting in the financial statements receiving an unqualified audit opinion.

2.Contractual obligations and/or money owed by the entity were not met and/or settled within 30 days, as requiredby section 38(1)(f) of the PFMA and treasury regulation 8.2.3.

3.Effective steps were not taken to prevent irregular expenditure amounting to R 27 485 420 as disclosed in note 34to the annual financial statements, as required by section 38(1)(c)(ii) of the PFMA and treasury regulation 9.1.1.

4.Effective steps were not taken to prevent fruitless and wasteful expenditure amounting to R12 268 248 asdisclosed in note 33 to the annual financial statements, in contravention of section 38(1)(c)(ii) of the PFMA andtreasury regulation 9.1.1.

5.Quotations were accepted from prospective suppliers who did not submit a declaration on whether they areemployed by the state or connected to any person employed by the state, which is prescribed in order to complywith Treasury Regulation 16A8.3.

Audit Report Issues

44


2016-2017

Unqualified

6.Contracts and quotations were awarded to suppliers whose tax matters had not been declared by the SouthAfrican Revenue Services to be in order as required by Treasury Regulations 16A9.1(d) and the PreferentialProcurement Regulations.

7.Goods and services of a transaction value above R500 000 were procured without inviting competitive bids, asrequired by Treasury Regulations 16A6.1. Deviations were approved by the accounting officer even though it wasnot impractical to invite competitive bids, in contravention of Treasury regulation 16A6.4.

8.Bid documentation for procurement of commodities designated for local content and production, did notstipulate the minimum threshold for local production and content as required by Preferential ProcurementRegulation 9(1)

9.Commodities designated for local content and production, were procured from suppliers who did not submit adeclaration on local production and content as required by Preferential Procurement Regulation 9(1)

FRUITLESS AND WASTEFUL EXPENDITURE

45

R thousand '000 2016/2017 2015/2016

Fruitless and Wasteful expenditure 12 146 726 2 878 428

Fruitless and Wasteful expenditure increase from R 2 878 428 reported in 2016 to R 12 146 726 in the current year. A total amount of R 3

000 000 was condoned by Council during the financial year.

The fruitless and wasteful expenditure identified during the current year is under investigation in terms of Section 38 and 51 of the PFMA

and disciplinary steps against relevant officials will be taken where it is proven the relevant officials committed the fruitless and wasteful

expenditure as disclosed.

IRREGULAR EXPENDITURE

46

R thousand '000 2016/2017 2015/2016

Irregular expenditure 27 287 048 1 179 691

Irregular expenditure increase from R 1 179 691 reported in 2016 to R 27 287 048 in the current year. A total amount of R 1 378 063 was

condoned by Council during the current financial year.

The irregular expenditure identified during the current year is under investigation in terms of Section 38 and 51 of the PFMA and

disciplinary steps against relevant officials will be taken where it is proven the relevant officials who committed the irregular expenditure

as disclosed.

Thank You

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