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EASTERN CARIBBEAN TELECOMMUNICATIONS AUTHORITY

ANNUAL REPORT 2014.....................................

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Table of Contents

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21 Report on the Operations of ECTEL 2013-2014 22 The Work Plan

22 Programme Implementation and Achievements

24 Regulation and Governance

24 Training and Human Resources Development

25 Regional Collaboration

25 Finance

25 Challenges

25 Acknowledgements

26 Financial Report 27 Balance Sheet

28 Statement of Comprehensive Income and Expenditure 29 Statement of Cash Flows 30 Notes to Financial Statements General information Summary of significant accounting policies 34 Financial risk management Critical accounting estimates and judgements 35 Cash and cash equivalents Trade and other receivables 37 Provision for impairment of trade receivables Investment securities 38 Property, Plant and Equipment 39 Trade and Other Payables Contributed Capital 40 Spectrum fees, net Other income, net 41 Expenses by nature 42 Employee benefit expense Comparative period adjustment

2 ANNUAL REPORT 2014 EASTERN CARIBBEAN TELECOMMUNICATIONS AUTHORITY

VISION

MISSIONSTATEMENT

To be a model multi-state regulatory system providing quality leadership and advice, by applying fair, transparent and independent processes to promote competition in a fully liberalised telecommunications environment for the creation of socio-economic opportunities within the Eastern Caribbean whilst ensuring network connectivity.

To create a fully liberalised telecommunications environment by promoting competition amongst service providers for the delivery of efficient and affordable telecommunications services to the people of ECTEL Member States by implementing applicable laws, treaties and agreements through fair, transparent and independent processes.


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ORGANISATION STRUCTURE

The Managing Director is responsible for the day to day running and operations of the work and staff at the Directorate. The ECTEL staff provide a range of expertise and advice to all aspects of the work of the Directorate.

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ECTEL Corporate Information

Registered Office & Postal Address

Vide BoutielleP O Box 1886CastriesSAINT LUCIAWEST INDIES

Email: [email protected]: www. ectel.intTelephone: 1 758 458 1701/2Fax: 1 758 458 1698

Chairman: Mr. Ignatius Jean

Managing Director: Mr. Embert Charles

General Counsel: Ms Deborah Bowers


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National Telecommunications Regulatory Commissions (NTRCs)

DOMINICA P. O. Box 26 King George V StreetRoseau, Commonwealth of DominicaTel: 1 (767) 440 0627Fax: 1 (767) 440 0835Email: [email protected] Website: www.ntrcdom.org

GRENADASuite #8Grande Anse Shopping Complex P. O. Box 854St. George’s, Grenada Tel: 1 (473) 435 6872Fax: 1 (473) 435 2132Email: [email protected] Website: www.ntrc.gd

SAINT LUCIA1st & 2nd Floor Rajana Group of Companies Building P. O. Box GM 690Gros Islet, Saint Lucia Tel: 1 (758) 458 0585/2035/452-6871/452-9527Fax: 1 (758) 453 2558Email: [email protected] Website: www.ntrc.org.lc

MEMBERSHIPS/AFFILIATIONSCaribbean Telecommunications Union (CTU)International Telecommunications Union (ITU)Internet Society (ISOC)Organisation of Caribbean Utility Regulators (OOCUR)

ST. KITTS AND NEVISP. O. Box 1958Cnr. Wigley Ave. & Jones StreetFortlands, Basseterre, St. Kitts Tel: 1 (869) 466 8997Fax: 1 (869) 466 6817Email: [email protected] Website: www.ntrc.kn

ST. VINCENT AND THE GRENADINES2nd Floor, NIC building Upper Bay Street P. O. box 2368Kingstown, St. Vincent and the Grenadines Tel: 1 (784) 457 2279Fax: 1 (784) 457 2834Email: [email protected] Website: www.ntrc.vc

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About ECTEL

The Eastern Caribbean Telecommunications Authority was established by the Governments of five Eastern Caribbean states (Commonwealth of Dominica, Grenada, Saint Christopher and Nevis, Saint Lucia and Saint Vincent and The Grenadines) to promote market liberalization and competition in telecommunications of the contracting states.

National Telecommunications Regulatory Commissions (NTRCs) have been established in each state to complement the work of ECTEL.

Dominica

Saint Lucia

Saint Christopher and Nevis

Saint Vincent and The Grenadines

Grenada


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GovernanceThe Council of Ministers comprises the Ministers responsible for Telecommunications in the ECTEL states, and the Director General of the OECS as an ex-officio member. Responsibilities include giving directives to the Board of Directors on matters arising out of the Treaty, and ensuring that the Board is responsive to the needs of the Member States in the implementation of telecommunications policy.

The Board of Directors comprises one member and an alternate from each Member State and the Managing Director of ECTEL as an ex-officio member. Responsibilities include making recommendations to the Council on any matter relating to telecommunications, and establishing rules and procedures consistent with the Treaty for the management and operation of the ECTEL Directorate.

The NTRCs – National Telecommunications Regulatory Commissions – are the Telecommunications regulators at the national level in each Member State. They are responsible for the processing of applications and advising the Minister on the award of licences.

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ensure effective implementation of the ECTEL Treaty and policies in accordance with the directives from the Council;

make recommendations to the Council on any matter relating to telecommunications;

report to the Council on the activities of the Board and Managing Director;

devise the forms and process for the application and recommendation for an individual licence, and to ensure the transparency of the process;

recommend to the Council the internal organisational structure of ECTEL;

authorise the tender procedures and fees payable to ECTEL for applications

determine the fees payable for the open tender process for individual licences where relevant,

recommend directions to licensees and frequency authorisation holders in relation to non-compliance with relevant telecommunications legislation, licences, frequency authorisations and regulations;

advise Contracting States on the management of the Universal Service Fund

establish rules and procedures consistent with this Treaty for the management and operation of ECTEL.

establish procedures for the operation of the ECTEL Fund, including receipt of revenues from the applications process and disbursements for the operations of ECTEL;

ensure prompt consideration of an application for an individual licence;

monitor, in conjunction with the respective National Telecommunications Regulatory Commissions, compliance with relevant telecommunications legislation, licences or frequency authorisations, and recommendations made by ECTEL by licencees and frequency authorisation holders;

advise the Contracting States of any breach of telecommunications legislation, licence or frequency authorisation or recommendation of ECTEL for appropriate action.

The functions of the Board of Directors are to-:


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ORGANISATIONAL STRUCTURE

Two broad areas form the basis on which ECTEL is structured. They are Policy and Regulation and Operations. Professionals in Technical Services, Economics and Finance and Legal Affairs make up the Policy and Regulations component, while the area of Operations includes Accounts, Human Resources, Corporate Relations and Communications & Administration and Information Systems.

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Remarks by Chairman of Council

Hon Ambrose George, Minister with responsibility of Telecommunications, Commonwealth of Dominica.

The growth of telecommunications services in the region has been phenomenal since the

advent of liberalization in 2000. All the contracting parties to the ECTEL treaty – Commonwealth of

Dominica, Grenada, St. Kitts and Nevis, Saint Lucia, and St. Vincent and the Grenadines – have remained

committed to the general principle of harmonization of regulation of telecommunications services. During the past

year in particular, the ECTEL Member States have been unified in their mission towards the development of a single

telecommunications space, in the same manner the OECS countries could now speak of one immigration policy. In that regard

the Council welcomed the participation of the governments of Antigua and Barbuda and Montserrat in the discussions on the policy

and regulatory challenges facing our region.

The ECTEL Council of Ministers is always mindful of the macro-economic and political characteristics of our small countries and the place we hold in

this global village. So while we ensure that the financial and human resources are provided for the administration of the regulatory system, the Council also

provides critical policy oversight of the management of these resources.

The Members of the Council have noted that the changing nature of the sector would require a redefinition and adjustment of most of our core parameters such as

services, which require regulation, and the indicators of growth and success.

This first annual report provides a summary of many of our achievements and continued challenges. However it demonstrates that the harmonized approach has resulted in cost

savings and increased benefits for the consumers in the ECTEL Member States.

It is critical that the Council continues to provide the guidance in the establishment and implementation of policies, which will solidify ECTEL as a mature regulatory body as well as

ensure that we implement and coordinate activities for the continued development of the sector in innovative and progressive ways. As we close another year of operations and look towards a

challenging year of regulating the sector, we must keep ourselves abreast of the many changing technological innovations, which can further develop the socio-economic well being of our citizens.

10 ANNUAL REPORT 2014 EASTERN CARIBBEN TELECOMMUNICATIONS AUTHORITY 10 ANNUAL REPORT 2014 EASTERN CARIBBEAN TELECOMMUNICATIONS AUTHORITY

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Remarks by the Chairman of the Board of Directors

Mr. Ignatius JeanChairman,

ECTEL Board of Directors

The Eastern Caribbean Telecommunications Authority (ECTEL) presents its report on the implementation of programmes and projects for the period October 1, 2013 to September 30, 2014. While in the past the reporting on the work plan was presented through the chairman of the ECTEL Board of Directors to the ECTEL Council of Ministers, this year the annual report is being published for the first time as a public document following the approval of the Council of Ministers.

ECTEL recognizes that in its role and functions as a regulator, accountability is best illustrated through comprehensive reporting of its operations. This annual report therefore includes the summary of the main achievements and challenges as well as the audited financial statements for the year.

During the past year, there was great emphasis on the capacity building of the technical team at the ECTEL Directorate and the National Telecommunications Regulatory Commissions (NTRCs). Three areas of training, capacity building and development presented for special attention are, competition law and analysis, the management of ICT statistics and indicators and the regulation of radio communications. These training and development programmes have the added function of deepening the collaboration between ECTEL and organisations such as the Caribbean Telecommunications Union (CTU) and the International Telecommunications Union (ITU). It is important that as a regulator, ECTEL continues to expand its involvement in many cross-cutting ICT issues which have come to the fore, because of technology and regulatory convergence.

Of note during the past year was the commencement of the Caribbean Communications and Infrastructure Programme (CARCIP). The outcome of this project will be far reaching as it is designed to address the current regulatory deficiencies in the areas of open access, undersea fibre as well as the management of Internet Exchange Points (IXP). The year also presented many challenges, which will be carefully reviewed and evaluated in preparation for the development of long-term strategies and a short-term annual work plan for the organization. One critical area, which required much attention for both ECTEL and the NTRCs, is media relations and public awareness. The few communications-related activities have been too scattered to be effective. Going forward therefore, additional resources will be allocated to communications and corporate relations.

As ECTEL prepares to celebrate its fifteenth anniversary of the signing of the Treaty, the Board of Directors invite all our stakeholders to participate in the activities, which will be organized by the ECTEL Directorate and the NTRCs. I wish to thank the other members of the Board of Directors for their sterling contributions during the past year and also the respective Ministers with responsibility for Telecommunications for providing us with the opportunity to serve our countries. The Board also extends its thanks to the NTRCs in the Member States for the part they continue to play in the regulation of the telecommunications sector. Our gratitude to the Managing Director and staff at the ECTEL Directorate for their extensive hard work, loyalty and dedication to uphold the mission of ECTEL and the purposes for which ECTEL was established.

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ECTEL’s Board of Directors

MR. IGNATIUS JEAN ChairmanSaint Lucia

MR. JAVAN WILLIAMS Grenada

MR. ISAAC SOLOMON St. Vincent and the Grenadines

MR. IAN MUNRODominica

MR. LAURINSTON MATTHEWSt. Kitts and Nevis


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Annual Sector Review ReportECTEL Member States

SUMMARY OF ANNUAL REVIEW OF ELECTRONIC COMMUNICATIONS SECTOR

The Eastern Caribbean Telecommunications Authority (ECTEL) has produced its annual review of the electronic communications sector. The report provides information on the performance and economic contribution of the sector, as well as information on deployment and use of electronic communications infrastructure in the ECTEL Member States. The report presents a review of the electronic communications sector for the period April 2013 to March 2014, and tracks the performance of the sector using a number of economic and statistical indicators which include sector revenue, investment and service penetration. The information contained in the report is based on data available as at February 28, 2015, and also includes revisions to data presented in previous reports where additional data was received.

The key findings of the review of the electronic communications sector across the ECTEL Member States for the period ended March 2014 areas follows:

Sector investment topped $110 million and sector revenue remained flat: For the first time in four years, capital expenditure by service providers exceeded $100 million, with $118 million being recorded at March 2014. The 32 per cent jump in investment was driven by infrastructure upgrades for the launch of 4G/HSPA+ mobile broadband series in the Member States. This increased investment was made in an environment of stagnated revenue growth.

Fixed broadband penetration increased 110 basis points to a high of 17.2 per cent: Subscriptions to fixed broadband services advanced a further 7 per cent to more than 87,400 and resulted in a penetration rate of 17.2 per cent.

4G/HSPA+ mobile broadband service launched in St Kitts and Nevis and Saint Lucia: During the review period Digicel and LIME launched mobile broadband service in St. Kitts and Nevis and LIME launched island-wide service in Saint Lucia. The availability of mobile broadband is expected to increase the accessibility of broadband services to consumers in the Member States. By the end of 2014 the service was available in all ECTEL Member States.

Overall local calling traffic from both fixed and mobile declined: Local calling minutes from both fixed and mobile networks declined 15 per cent to 1.1 billion minutes. Fixed call volumes fell 18 per cent, and thirteen per cent less local traffic originated from mobile networks.


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In its 2013 Annual Economic and Financial Review, the Eastern Caribbean Central Bank (ECCB) reported that from available data there was a pick up in economic activity in the Eastern Caribbean Currency Union (ECCU) as real GDP growth was estimated to have increased 0.7 per cent, which was an improvement over the 0.2 per cent experienced in 2012. This uptake in activity was a result of a number of factors including increased foreign direct investment inflows, and growth in private and public sector investments. In addition, a number of key sectors - construction, hotel and restaurant and agriculture, livestock and forestry, recorded increases in value added. In the ECTEL Member States, Grenada, St. Kitts and Nevis and St. Vincent and the Grenadines recorded positive economic growth, while activity in Dominica was flat and Saint Lucia’s economy contracted.

The performance of the telecommunications sector appears to have mimicked the overall economy. The sector benefitted from a significant (16 per cent) increase in investment as service providers launched or prepared to launch 4G/HSPA+ mobile broadband service. However, sector revenue was relatively flat and total local calling volumes were down 15 per cent to 1.12 billion minutes.

Operator Reported Revenue

Revenue earned by telecoms operators across the ECTEL Member States fell flat and was reported at $696 million (Figure 1.1). Fixed voice services recorded a 4 per cent fall in revenue and accounted for 30 per cent of overall sector revenue. Fixed broadband services, which has been the engine of growth in the past three years, generated a modest 2 per cent increase in revenue and contributed 13 per cent to total sector revenue.

Mobile services have been the bellwether of the telecommunications sector. For the review period, mobile services contributed 57 per cent to sector revenue having added 1.1 per cent to its prior year’s share of sector revenue.

Figure 1.1: Telecoms sector revenue in the ECTEL Member States

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Investment Figure 1.2:Telecoms sector investment in the ECTEL Member States


Direct Employment

For the first time since market liberalisation, the number of full-time employees of licensed

telecoms operators fell to less than 1,000 (Figure 1.3). At March 2014, service providers employed an estimated 940 persons. This was 22 per cent

fewer than in the previous period.

The significant fall in the number of full-time workers employed by service providers was

largely due to one major regional operator outsourcing its field service operations to a

third party. There were also job losses due to cost cutting measures and increased adoption

of efficient technological business solutions. A majority of the persons let go by licensed operations still work in the sector, providing

services to licensed operators.

Figure 1.3: Telecoms sector employment in the ECTEL Member States


Investments by telecoms operators in the ECTEL Member States increased for the fourth straight year. Spending in the review period reached just over $118 million, 32 per cent more than in the previous period. Sector investment was recorded at over $100 million for the first time in four years. The overall investment rate moved up 400 basis points to 17 per cent (Figure 1.2).

The jump in investment growth was the direct result of the launch of island-wide 4G/HSPA+ mobile broadband networks in a number of the ECTEL Member States. During the period, 4G networks were launched in St. Kitts and Nevis and Saint Lucia and the preparations for its launch in the other Member States were well on the way. In addition, operators also reported upgrades to fixed broadband infrastructure and submarine cable systems.

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Telecoms Service Penetration

During the review period:

Fixed broadband penetration jumped 110 basis points to 17.2 per cent (Figure 1.4).There was 15 per cent less mobile subscriptions than in the previous period. This was a direct result of a change in accounting methodology for prepaid mobile subscriptions by one operator. Mobile penetration was 1.09 subscriptions per inhabitant.The number of fixed lines in service was down by 100 and fixed line penetration fell 10 basis points to 22.7 per cent.

Figure 1.1: Telecoms sector revenue in the ECTEL Member States 2Figure 1.2: Telecoms sector investment in the ECTEL Member States 2

Figure 1.4: Telecoms service penetration in the ECTEL Member States


Subscriptions

The number of landlines in service continued to decrease but at a slower rate. At March 2014, there were 115,100 landlines in service across

the ECTEL Member States (Figure 1.5). This was a 0.1 per cent drop in overall landlines, as the 4

per cent growth in business lines nearly offset the 2 per cent fall in residential lines. Business lines increased its share of total lines one percentage

point to 31 per cent.

There was a significant change in the market for mobile services during the review period,

as a major mobile operator indicated a change in the methodology used to determine active

prepaid mobile subscriptions. As a result of this change prepaid subscriptions fell 15 per cent to

an estimated 551,500. With no change in the accounting for postpaid subscriptions, growth of

4 per cent was recorded.

Figure 1.5: Fixed and mobile subscriptions in the ECTEL Member States


Voice Services

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Network Traffic

Both fixed and mobile networks experienced contractions in traffic volumes:

Traffic from mobile and fixed networks was down 15 per cent to 1.12 billion minutes (Figure 1.6).On-net mobile calling minutes, which accounted for 49 per cent of local traffic, experienced a 14 per cent reduction. Monthly fixed calling was recorded at 330 minutes per subscription, 18 per cent less than in the previous period.Fixed to mobile calling, which has been on the decline in the past few periods edged up 2 per cent, to just over 35 million minutes.The number of SMS sent by consumers was estimated at just over 200 million messages.

Figure 1.6: Local traffic in the ECTEL Member States

Figure 1.7: Outgoing International traffic in the ECTEL Member States


International Outgoing Traffic

There was a further decline in the number of outgoing international calling minutes from the ECTEL Member States during the review period.

Consumers used an estimated 89 million calling minutes from both fixed and mobile networks. This was 13 per cent less minutes than was used in the previous period.

A majority of the calling minutes, 63 per cent, originated from mobile networks (Figure 1.7).

Figure 1.1: Telecoms sector revenue in the ECTEL Member States 2Figure 1.2: Telecoms sector investment in the ECTEL Member States 2

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INTERNET AND BROADBAND SERVICES

Fixed Broadband Service

There were 87,400 fixed broadband subscriptions in the ECTEL Member States at the end of March 2014. This represented a 7 per cent increase over the previous period (Figure 1.8). The growth rate for fixed broadband subscriptions has been relatively constant over the past three years. ADSL and cable modem remain the prevailing broadband technologies; however, during the reporting period providers indicated that fibre to the building (FttH) was also available in some Member States.

Figure 1.8: Internet subscriptions in the ECTEL Member States


Affordability of Fixed Broadband Service

The broadband sub-basket of the ITU’s ICT Price Basket revealed that fixed broadband service remained most affordable in St. Kitts and Nevis and Grenada. In both Member States, the cost of fixed broadband as a per cent of GNI p.c. was less than 5 per cent – the Broadband Commission’s target for affordability.

The value of the broadband sub-basket held firm in Saint Lucia and St. Vincent and the Grenadines at 6.10, but Dominica recorded a value of 6.70, up from 5.60 in the previous year. The affordability of fixed broadband remains a challenge in these Member States. (Figure 1.9).

Figure 1.9: Fixed Broadband prices in ECTEL Member States

Source: ITU

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Mobile Internet Service

During the review period, 4G/HSPA+ mobile broadband service was available to customers in St. Kitts and Nevis and Saint Lucia while mobile internet service was only available via GPRS and EDGE in the other Member States. Mobile internet service in the Member States is largely available via mobile handsets.

At March 2014 there were an estimated 163,000 mobile internet packages associated with mobile service subscriptions. This represents roughly 30 per cent of mobile subscriptions. In Member States where 4G service was launched, providers announced that the service is available island-wide. This meant that any customer with a 4G enabled handset could potentially access 4G mobile broadband service.

Subscriber Television

For the period under review, subscriber TV operators reported revenue of just over $81 million, a 4 per cent increase over that reported at March 2013. In line with this increase in revenue, the number of subscriptions to pay TV services rose 3 per cent to a reported 102,300. This was roughly 20,000 more than the number of fixed broadband subscriptions across the ECTEL Member States.


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Report on ECTEL’s Work ProgrammeOctober 2013 to September 2014

IntroductionThe ECTEL Annual Report outlines the main achievements of the ECTEL Directorate during the financial year. The report replaces

that of the chairman, to the board of Directors, to the Council of Ministers, which was normally presented at the meeting of

Council and then disseminated to other stakeholders as well as published on the ECTEL website.

This new format of reporting is consistent with the general principles of regulation, which requires regulators to be fully

accountable to all stakeholders through regular and timely reporting.

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The Work Plan

At its 28th meeting, which was held in the Commonwealth of Dominica on 25th October 2013, the ECTEL Council of Ministers approved the Work Plan for ECTEL, as well as the budget for ECTEL and the NTRCs, for the 2013 – 2014 financial year.

Legislative and Regulatory Reform which includes activities related to the draft Electronic Communications Bill and new policies and regulations.

Consumer Protection and Quality of Services. This involves increasing public awareness and greater efforts at the implementation of Quality of Service rules and regulations.

Strengthening competition through increased capacity of the regulatory team to ensure that the rules of liberalisation are implemented effectively.Spectrum Management. The development of

1. The Directorate completed the final phase of the preparation of the draft Electronic Communications Bill (EC Bill). This included a final round of consultations with the NTRCs, and two workshops with drafters from the ECTEL Member States. The revised draft from these activities has been submitted to the ECTEL Council of Ministers for approval for onward transmittal to the OECS Secretariat. Council had requested that the OECS Secretariat submit the draft EC Bill to the OECS Legal Affairs Committee, for its consideration.

The Work Plan for the year also included organisational priorities such as ensuring the financial sustainability of the ECTEL system, increasing capacities for ICT sector data collection, and integration of administrative systems of ECTEL and the NTRCs.

enhanced integrated monitoring systems, and collaboration with neighboring regulators on issues of interference.

Regulatory collaboration with regional and national institutions, in an effort to strengthen ECTEL’s enforcement capabilities.

The strategic priorities for the year were identified as follows:

Programme Implementation and Achievements

In line with the Treaty, a significant portion of staff time and resources of the Directorate is devoted to the preparation of Opinions for the Commissions on the interpretation of the Telecommunications Acts and related regulations and the recommendation of individual licences and frequency authorisations.

During the first half of the 2013-2014 financial year, one individual licence recommendation was made in respect of Wikibuli of Dominica. The entry of new service providers in the telecommunications sector continues to be slow.

The Directorate recommended thirteen frequency authorisations during the period, mainly for the provision of broadcasting services and to respond to reconfiguration of networks of telecommunications service providers.

The following are some highlights of the work accomplished by the ECTEL Directorate during the first half of the year -

2. A regional workshop on Information and Communication Technology (ICT) Indicators which provided training for ECTEL and NTRC staff and the senior official of Statistics Department of the ECTEL Member States. Other participants came from Trinidad and Tobago, Barbados, Brazil, Bermuda and Suriname. The workshop was co-hosted by ECTEL and the International Telecommunications Union (ITU).


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3. Selection of consultant to undertake a review of the Price Cap Plan. Following a detailed procurement process, a consultant was selected. The Directorate has completed the contract negotiation and the work is scheduled to commence during the third quarter of the year.

4. Legal Opinion on the Reserve Funds. The Directorate completed the process of selection of a consultant. At the time of reporting, work had commenced on the assignment.

5. The Board of Directors approved the recommendations of the Directorate on net neutrality. This decision follows a public consultation on the matter, and paves the way for the Directorate to continue work on the rules and regulations on net neutrality.

6. Recommendations on the implementation of new records information system for ECTEL. This assignment involved a review of ECTEL’s records management systems, training of staff, and a suite of recommendations for hardware and software. The recommendations will be shared with the NTRCS.

7. Annual administrative staff training workshop for ECTEL and the NTRCs. The participants were the administrative staff of ECTEL and the NTRCS. The training is designed to build the capacity of the administrative staff in the general areas of regulation.

8. The Annual Electronic Communication Sector Review for 2012 - 2013 was published by ECTEL. The public launch took place at the conclusion of the regional workshop on ICT Indicators. The local media in Saint Lucia provided coverage for the event.

ECTEL’s engagement in regional and national initiatives included the following

The Directorate has also noted that some activities in the current work programme have been delayed or were not implemented. With the exception of the launch of the redesigned ECTEL website, there were no other activities related to the implementation of the public awareness programmes in respect of consumer protection and quality of service.

Due to the large number of joint programmes implemented during the reporting period, the Directorate did not undertake field visits related to enforcement of regulations and the collection of outstanding spectrum fees to the NTRCs.

Other major programmes, which were delayed, include the implementation of Number Portability, the consumer broadband survey and the development of draft legislation on roaming.

Participation in the Caribbean Growth Forum - Saint Lucia. Senior members of staff participated in the first accountability meeting of the Saint Lucia Chapter of the Caribbean Growth Forum.

Participation in ECERA through the Regional Technical Committee. A member of staff has served on the Committee from its inception.

Participation in CARCIP project. The selection process was completed for a consultant to assist ECTEL in the delivery of policy recommendations related to open access, the regulation of cross-border fibre optic cables, and the operation of national Internet Exchange Points (IXPs). ECTEL also serves on the Regional Steering Committee of CARCIP.

The Managing Director represented ECTEL at the Pacific Caribbean Conference on Effective and Sustainable Regulation of Electricity and Water Services in Fiji.

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Regulation and Governance

The main programmes and projects, which have been completed or significantly advanced during the period, are as follows:

(a) Competition Issues, Law and Analysis. This five-day training programme for Commissioners and staff of ECTEL and the NTRCs provided the skills and competences to address the emerging issues facing regulators in the region. The topics covered included definition of markets in different regulatory environments; dominance and significant market power; anti-competitive behavior and practices in the telecommunications sector; merger legislation in CARICOM; relationship between sector regulator and regional competition authority;

(b) Electronic Communications (EC Bill). ECTEL presented the draft EC Bill to the meeting of the OECS Legal Affairs Committee (LAC). The LAC has required some additional work to be undertaken by the Directorate, and these tasks have been included in the work plan for the new year. The LAC discussed the nature of relationship, which should exist, through a Memorandum of Understanding, between ECTEL and the OECS Competition Commission. The LAC also noted the need for the amendments to the ECTEL Treaty, in order that the provisions are consistent with the new provisions in the draft EC Bill.

(c) Price Cap Plan (PCP). A consultant was engaged to review the PCP and make recommendations to ECTEL. The review exercise has been completed and a recommendation was presented to the Commissions at the 15th NTRC/ECTEL Consultative Forum. The Commissions are reviewing the recommendation prior to its submission to the Board of Directors, and

commencement of a public consultation. The new plan recommends fewer services in the baskets; price cap on data services; more free minutes.

(d) Broadband Survey. The design of the survey instrument and pre-testing were completed. The Directorate is collaborating with the Central Statistic Offices in the ECTEL Member States, the administrative arrangements for the data collection and analysis.

(e) ECTEL Spectrum Fund. Following a decision of the ECTEL Council of Ministers, a Legal Opinion on the treatment of surplus in the ECTEL Fund was completed and presented to the ECTEL Council of Ministers and the ECTEL Board of Directors.

(f) Fifteenth ECTEL/NTRC Consultative Forum. At this Forum, the Commissions and staff of the Directorate discussed the PCP recommendations, reviewed proposals for changes in the Quality of Service Regulations, and considered proposals for amendments to the ECTEL Treaty, in respect of the draft Electronic Communications Bill.

(g) Publication of Revised Fees Regulations. The Government of Saint Lucia published the required notices and the revised Fees Regulations, which inter alia, give the NTRCs the authority to assign frequency in the 700 MHz band. The regulations and the notices also address issues related to services which are exempt from licence fees and the classification of services, for the purposes of licencing.

Training and Human Resources Development

In addition to the joint training programme with the NTRCs, members of the Directorate received external training in the following areas -

• Fixed Assets reporting• Human Resources Management and Organisational

Development• Records Management• The New Social Economy – Rebooting Human

Resources for the Digital Age• Management Skills for Administrative Professionals• Management Skills for new Supervisors

• Effective Price Regulation for Broadband – ITU Expert Level Training

• Utility regulation and strategy – International Training Program in Utility Regulation

• Household ICT indicators – ITU Expert Level Training• International Radio Communications Rules and

Regulations - ITU Regional Radio Communications Seminar

The Directorate also provided support to staff members of two Commissions to enable their participation at the International Regulators Forum and the Telecommunications and Media Forum, both of which were convened in Miami, USA by the International Institute of Communications.


25

Regional Collaboration

Caribbean Regional Infrastructure Project (CARCIP). Two key activities under the CARCIP project were completed during the reporting period – the recruitment of a Project Officer assigned to the Directorate to manage the ECTEL related activities; and the development of the terms of reference to secure consultancy service for the Development of a Legal and Regulatory Framework for Regulation of Subsea Fiber and IXPs. Additionally, ECTEL staff participated in the regular meetings of the CARCIP Steering Committee and the CARCIP Project Planning Committee. ECTEL also held meetings with the main consultants on the infrastructure component of CARCIP

Harmonised Caribbean Spectrum Planning and Management Project (HCSPMP). ECTEL serves on the HCSPMP Task Force. During the reporting period ECTEL participated in the Project Task Force meeting, and also in the evaluation of proposals related to minimising cross border interference between beneficiary countries. The project aims to build capacity in spectrum management, prepare the region to manage the increased demand for spectrum from emerging technologies and to develop consensus for a Caribbean position for the upcoming ITU

Finance

Fees collection for the first half of the year was sluggish, compared to the same period last year. As at March 1st, 2014, the collections were $4 million, or 41 per cent for the projected revenue. The Directorate has developed a system for following up with providers who are slow to meet their obligations, and has started the process of engagement with the NTRCs and providers on this matter.

Disbursements were made to the NTRCs based on the approved budget. The overall expenditure was kept within approved limits.

The financial performance of the ECTEL Directorate is presented in the attached auditors’ report.

Challenges

While the Directorate is able to report on achievements during the period, there were also some key challenges that negatively impacted its work.

During the first half of the year, the limited human resources of the Directorate were stretched as efforts were made to implement the priority activities, while responding to the increasing requests from the Commissions and Member States.

With the fast moving changes in the Telecoms/ICT sector, the Directorate requires new areas of expertise particularly in the areas of research and policy development and public awareness.

Acknowledgements

The implementation of most of the scheduled activities for the period is largely due to the commitment of the staff, who all worked tirelessly in the current challenging environment. A major success factor is the critical oversight of the Board of Directors and the ECTEL Council of Ministers.

World Radio Conference. The HCSPMP is coordinated by Caribbean Telecommunications Union (CTU), and funded by the Inter-American development Bank.

CANTO. The Annual Conference of the Caribbean Association of National Telecommunications Organisations (CANTO) took place in the Bahamas in August. ECTEL was represented by a member of the ECTEL Board of Directors, who made presentation on the theme of the conference “Strategic Alliances for Sustainable Broadband Development.” CANTO members were forthright in their support of blocking VoIP related services while the ECTEL Ministers were resilient in their articulation of the principle of internet neutrality and the innovation in the electronic communications sector.

The unanimous position on over-the top (OTT) services, taken by the service providers demonstrated the need for a unified approach by the regulators and ministers. The meeting also highlighted the need for ECTEL to continue active engagement and provide leadership on the regulatory response to emerging issues in the sector.

25

26 ANNUAL REPORT 2014 EASTERN CARIBBEAN TELECOMMUNICATIONS AUTHORITY 26 ANNUAL REPORT 2014 EASTERN CARIBBEAN TELECOMMUNICATIONS AUTHORITY

February 16, 2015

Independent Auditor’s Report

To the Members ofEastern Caribbean Telecommunications Authority

Report on the Financial StatementsWe have audited the accompanying financial statements of Eastern Caribbean Telecommunications Authority (the Authority) which comprise the balance sheet as of September 30, 2014 and the statements of comprehensive income and expenditure, changes in members’ surplus and cash flows for the year then ended and a summary of significant accounting policies and other explanatory notes.

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the accompanying financial statements present fairly, in all material respect, the financial position of the Authority as of September 30, 2014, and of its financial performanceand its cash flows for the year then ended in accordance with International Financial Reporting Standards.

Chartered Accountants

Grant ThorntonPoint Seraphine, P.O. Box 195Castries, St. LuciaWest Indies

T+ 1 758 456 2600F+ 1 758 452 1061www.grantthornton.lc

Audit • Tax • AdvisoryMembers of Grant Thornton International Ltd

27

Eastern CaribbeanTelecommunications Authority

Financial Statements

27

Chartered Accountants

Eastern Caribbean Telecommunications AuthorityBalance SheetAs of September 30, 2014(expressed in Eastern Caribbean dollars)

2014 2013

$ $

(Restated)

Assets

Current assets

Cash and cash equivalents (Note 5) 21,016,736 19,339,732Trade and other receivables (Note 6) 3,654,555 3,343,892Investment securities: Loans and receivables (Note 8) 4,446,658 4,286,217

29,117,949 26,969,841

Property, plant and equipment (Note 9) 663,893 840,787

Total assets 29,781,842 27,810,628

Liabilities

Current liabilities

Trade and other payables (Note 10) 689,519 873,790Advance deposits 618,662 542,228

Total liabilities 1,308,181 1,416,018

Members’ Surplus

Contributed capital (Note 11) 8,299,319 8,462,066

Accumulated fund 20,174,342 17,932,544

Total members’ surplus 28,473,661 26,394,610

Total liabilities and members’ surplus 29,781,842 27,810,628

Approved by the Board of Directors on February 12, 2015

___________________________________ Director ___________________________________ Director

The accompanying notes form an integral part of these financial statements.


Eastern Caribbean Telecommunications AuthorityStatement of Comprehensive Income and ExpenditureFor the year ended September 30, 2014 (expressed in Eastern Caribbean dollars)

Eastern Caribbean Telecommunications AuthorityStatement of Changes in Members’ SurplusFor the year ended September 30, 2014 (expressed in Eastern Caribbean dollars)

2014 2013

$ $

Revenue

Spectrum fees, net (Note 12) 6,739,755 7,526,093

Administrative expenses (4,975,972) (6,210,054)

1,763,783 1,316,039

Other income, net (Note 13) 315,268 551,195

Excess of comprehensive

income over expenditure for the year 2,079,051 1,867,234

2014 2013

$ $

Contributed capital

At beginning of year 8,462,066 8,659,903Amortisation of contributed capital (162,747) (197,837)

At end of year 8,299,319 8,462,066

Accumulated fund

At beginning of year 17,932,544 15,867,473Amortisation of contributed capital 162,747 197,837Excess of comprehensive income over expenditure for the year 2,079,051 1,867,234

At end of year 20,174,342 17,932,544

Members’ surplus 28,473,661 26,394,610


29 29

Eastern Caribbean Telecommunications AuthorityStatement of Cash FlowsFor the year ended September 30, 2014(expressed in Eastern Caribbean dollars)


2014 2013

$ $

(Restated)

Cash flows from operating activities

Excess of income over expenditure for the year 2,079,051 1,867,234Adjustments for: Depreciation (Note 9) 237,643 464,767 Interest income (329,154) (549,405) Loss/(gain) on disposal of property plant and equipment 2,845 (300)

Operating surplus before working capital changes 1,990,385 1,237,919

(Increase)/decrease in trade and other receivables (310,663) 2,248,912 Decrease in trade and other payables (184,271) (83,606) Increase/(decrease) in advance deposits 76,434 (2,661,681)

Net cash from operations 1,571,885 1,285,921

Interest received 329,154 548,929

Net cash generated from operating activities 1,901,039 1,834,850

Cash flows from investing activities

Purchase of property, plant and equipment (63,594) (107,887)Proceeds from the sale of property plant and equipment – 300(Increase)/decrease in investment securities, net (160,441) 301,161

Net cash (used in)/from investing activities (224,035) 193,574

Net increase in cash and cash equivalents 1,677,004 2,028,424

Cash and cash equivalents, beginning of year 19,339,732 17,311,308

Cash and cash equivalents, end of year (Note 5) 21,016,736 19,339,732


Eastern Caribbean Telecommunications AuthorityNotes to Financial StatementsSeptember 30, 2014(expressed in Eastern Caribbean dollars)

1 General information

Eastern Caribbean Telecommunications Authority (the Authority) was established on May 4, 2000, by treatyamong the contracting Member States of the Organisation of Eastern Caribbean States (OECS) to administer andprovide technical advice to Member States. The Member States are St. Lucia, Dominica, Grenada, St. Kitts andSt. Vincent and the Grenadines. The Authority was given certain privileges and immunities under itsHeadquarters agreement with the Government of St. Lucia.

The Liberalisation of the telecommunication services within the Member States initially started with the OECSTelecommunication Reform Project (the Project) which commenced in 2000 and was funded by the World Bankwith contributions from Member States. The Authority was to run concurrently with the Project and assume fullyresponsibilities thereafter. All assets of the Project were transferred to the Authority on January 1, 2005.

The Authority’s headquarters is located in Castries, St. Lucia.

2 Summary of significant accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below.These policies have been consistently applied to all the years presented, unless otherwise stated.

Basis of preparationThe financial statements of the Eastern Caribbean Telecommunications Authority have been prepared inaccordance with International Financial Reporting Standards (IFRS) and under the historical cost convention.The preparation of financial statements in conformity with IFRS requires the use of certain critical accountingestimates. It also requires management to exercise its judgement in the process of applying the Authority’saccounting policies. The areas involving a higher degree of judgment or complexity, or areas whereassumptions and estimates are significant to the financial statements are disclosed in Note 4.

Changes in Accounting policies and disclosures

(a) New and amended standard adopted by the Authority

• IFRS 13 ‘Fair Value Measurement’ (IFRS 13) IFRS 13 clarifies the definition of fair value and provides related guidance and enhanced disclosures about fair value measurements. It does not affect which items are required to be fair-valued. The scope of IFRS 13 is broad and it applies for both financial and non-financial items for which other IFRSs require or permit fair value measurements or disclosures about fair value measurements except in certain circumstances. IFRS 13 applies prospectively for annual periods beginning on or after January 1, 2013.

• IAS 27 ‘Separate Financial Statements – Amendments’ (effective January 1, 2013). This Standard requires that when an entity prepares separate financial statements, investments in subsidiaries, associates and jointly controlled entities are accounted for either at cost, or in accordance with IFRS 9 Financial Instruments.

• IFRS 10 ‘Consolidated Financial Statements’, (Effective January 1, 2013). The standard requires a parent to present consolidated financial statements as those of a single economic entity, replacing the requirements previously contained in IAS 27 Consolidation and Separate Financial Statements and SIC-12 Consolidation — Special Purpose Entities.

• IFRS 12, ‘Disclosures of interests in other entities’, (effective for annual periods beginning on or after January 1, 2013). IFRS 12 includes the disclosure requirements for all forms interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles.

31 31


(b) New standards, amendments and interpretations issued but not effective and not early adopted

• IFRS 9, ‘Financial instruments part 1: Classification and measurement’, (effective January 1, 2015). IFRS 9 was issued in November 2009 and replaces those parts of IAS 39 relating to the classification and measurement of financial assets. Amendments to IFRS 9 Mandatory Effective Date of IFRS 9 and Transition Disclosures, issued in December 2011, moved the mandatory effective date of both the 2009 and 2010 versions of IFRS 9 from January 1, 2013 to January 1 2015. Key features are as follows:

• Financial assets are required to be classified into two measurement categories: those to be measured subsequently at fair value, and those to be measured subsequently at amortised cost. The decision is to be made at initial recognition. The classification depends on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument.

• An instrument is subsequently measured at amortised cost only if it is a debt instrument and both the objective of the entity’s business model is to hold the asset to collect the contractual cash flows, and the asset’s contractual cash flows represent only payments of principal and interest (that is, it has only ‘basic loan features’). All other debt instruments are to be measured at fair value through profit or loss.

• All equity instruments are to be measured subsequently at fair value. Equity instruments that are held for trading will be measured at fair value through profit or loss. For all other equity investments, an irrevocable election can be made at initial recognition, to recognise unrealised and realised fair value gains and losses through other comprehensive income rather than profit or loss. There is to be no recycling of fair value gains and losses to profit or loss. This election may be made on an instrument-byinstrument basis. Dividends are to be presented in profit or loss, as long as they represent a return on investment.

• IFRS 15 ‘Revenue from Contracts with Customers’ (effective for reporting periods beginning on or after January 1, 2017. IFRS 15 presents new requirements for the recognition of revenue, replacing IAS 18 ‘Revenue’, IAS 11 ‘Construction Contracts’, and several revenue-related Interpretations. The new standard establishes a control-based revenue recognition model and provides additional guidance in many areas not covered in detail under existing IFRSs, including how to account for arrangements with multiple performance obligations, variable pricing, customer refund rights, supplier repurchase options, and other common complexities. The Authority’s management have not yet assessed the impact of IFRS 15 on the financial statements.

• Amendments to IFRS 11 Joint Arrangements (effective for reporting periods beginning on or after January 1, 2016).These amendments provide guidance on the accounting for acquisitions of interests in joint operations constituting a business. The amendments require all such transactions to be accounted for using the principles on business combinations accounting in IFRS 3 ‘Business Combinations’ and other IFRSs except where those principles conflict with IFRS 11. Acquisitions of interests in joint ventures are not impacted by this new guidance.

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have amaterial impact on the Authority.

Cash and cash equivalentsCash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquidinvestments with original maturities of three months or less.

Trade receivables

Trade receivables are carried at original invoice amount less provision made for impairment of these receivables.A provision for impairment of trade receivables is established when there is objective evidence that the Authoritywill not be able to collect all amounts due according to the original terms of receivables. Significant financialdifficulties of the debtor, probability that the debtor will enter bankruptcy or financial delinquency in paymentsare considered good indicators that the trade receivable is impaired. The amount of the provision is the difference

2 Summary of significant accounting policies … continued

Changes in Accounting policies and disclosures


between the carrying amount and the present value of estimated future cash flows, discounted at the effectiveinterest rate. The amount of the provision is recognised in the statement of comprehensive income andexpenditure.

Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment.Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstancesindicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount bywhich the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of anasset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are groupedat the lowest levels for which there are separately identifiable cash flows (cash-generating units).

Property, plant and equipmentProperty, plant and equipment were transferred to the Authority on completion of the OECS TelecommunicationReform project and are recorded at written down value which approximates the fair value of the assets at thatdate less accumulated depreciation. All other property, plant and equipment are stated at historical cost lessdepreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,only when it is probable that future economic benefits associated with the item will flow to the Authority and thecost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All otherrepairs and maintenance are charged to the statement of income and expenditure during the financial period inwhich they are incurred.

Depreciation is calculated using the straight-line method to allocate their cost to their residual useful lives asfollows:

Furniture and equipment 5%Motor vehicles 20%Computer and equipment 20%Spectrum equipment and software 10 - 33%Office equipment 15%Leasehold improvements 2%

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amountis greater than its estimated recoverable amount.

Gains and losses on disposals of property, plant and equipment are determined by comparing proceeds withcarrying amount and are included in the statement of income and expenditure.

Contributed capitalContributed capital represents the fair value of assets donated to the Authority. The amount is amortised overthe estimated useful lives of the representative assets.

ProvisionsProvisions are recognised when the Authority has a present legal or constructive obligation as a result of pastevents, it is more likely than not that an outflow of resources will be required to settle the obligation, and theamount can be reliably estimated.



33 33

Financial assets

The Authority classifies its investments as loans and receivables. The classification depends on the purpose forwhich the investments were acquired. Management determines the classification of its investments at initialrecognition and re-evaluates this designation at every reporting date.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are notquoted in an active market. Loans and receivables are recognised initially at fair value and subsequentlymeasured at amortised cost using the effective interest method, less provision for impairment. A provision forimpairment of loans and receivables is established when there is objective evidence that the Authority will notbe able to collect all amounts due according to their original terms.

Regular way purchases and sales of investments are recognised on trade-date – the date on which theAuthority commits to purchase or sell the asset. Investments are initially recognised at fair value plus, in thecase of all financial assets not carried at fair value through profit and loss, transaction costs that are directlyattributable to their acquisition. Investments are derecognised when the rights to receive cash flows from theinvestment have expired or where they have been transferred and the Authority has also transferredsubstantially all risks and rewards of ownership.

The Authority assesses at each balance sheet date whether there is objective evidence that a financial asset orgroup of financial assets is impaired.

Revenue recognitionRevenues comprise the fair value of services rendered in the ordinary course of the Authority’s activities.Revenue is shown net of distributions.

The Authority recognises revenue when the amount of revenue can be reliably measured, it is probable thatfuture economic benefits will flow to the entity and specific criteria have been met for each of the Authority’sactivities described below. The amount of the revenue is not considered to be reliably measurable until allcontingencies relating to the sale are resolved.

Spectrum feesSales of services are recognized in the accounting period in which the services are rendered, by reference tothe allocation of spectrum space to customers.

Advance depositsAdvance payments for services which have not yet been performed.

Foreign currency translation

Functional and presentation currencyItems included in the financial statements of the Authority are measured using the currency of the primaryeconomic environment in which the entity operates (“the functional currency”). The financial statements arepresented in Eastern Caribbean dollars, which is the Authority’s functional and presentation currency.

Transactions and balancesForeign currency transactions are translated into the functional currency using the exchange rates prevailingat the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of suchtransactions and from the translation at year-end exchange rates of monetary assets and liabilitiesdenominated in foreign currencies are recognised in the statement of income and expenditure.

ComparativesExcept when a standard or an interpretation permits or requires otherwise, all amounts are reported ordisclosed with comparative information.




3 Financial risk management

The Authority’s activities expose it to a variety of financial risk: market risk (including currency risk fairvalue interest rate risk, cash flow interest rate risk), credit risk and liquidity risk. Management of these risksare done by management in conjunction with the Board of Directors.

(a) Market risk(i) Foreign exchange riskThe Authority operates in the telecommunication industry and is exposed to foreign exchange risk arisingfrom transactions in United States dollars. The exchange rate of the Eastern Caribbean dollar (EC$) to theUnited States dollar (US$) has been formally pegged at EC$2.70 = US$1.00 since 1976.

(ii) Cash flow and fair value interest rate riskThe Authority has interest-bearing assets. They consist primarily of debt securities classified as loans andreceivables. Debt securities are at fixed interest rates, as such the Authority’s income and operating cashflows are substantially independent of changes in the market place.

(b) Credit riskCredit risk arises from the possibility that counterparties may default on their obligations to the Authority.Credit risk is managed on an entity level. Credit risk arises from and deposits with banks and financialinstitutions, debt securities classified as loans and receivables and trade and other receivables. Individual risklimits are not set by Management. Management monitors and follows up on trade and other receivablesregularly.

Credit quality of financial assetsFinancial assets that are neither past due nor impaired (Note 6) are not independently rated.

The amount of the Authority’s maximum exposure to credit risk is indicated by the carrying amount of itsfinancial assets at the balance sheet date. Management does not expect any losses from non-performance bythese counterparties as at September 30, 2014.

(c) Liquidity riskPrudent liquidity risk management implies maintaining sufficient cash and the availability of funding throughan adequate amount of committed credit facilities. Trade and other payables and deferred revenue are duewithin 12 months based on the remaining period at the balance sheet date to the contractual maturity date. Thecontractual undiscounted cash flows approximate the carrying amounts at the balance sheet date. Balancesdue within 12 months equal their carrying amounts as the impact of discounting is not significant.

(d) Capital risk managementThe Authority’s objectives when managing capital are to safeguard the Authority’s ability to continue as agoing concern in order to provide returns for shareholders and benefits for other stakeholders and to maintainan optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Authority may seek financing from the member states.

4 Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and otherfactors, including expectations of future events that are believed to be reasonable under the circumstances.

The Authority makes estimates and assumptions concerning the future. The resulting accounting estimateswill, by definition, seldom equal the related actual results.

Management does not consider that there are estimates and assumptions that will have a significant risk,causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.


35 35

5 Cash and cash equivalents

6 Trade and other receivables

2014 2013

$ $

Cash on hand 428 500Cash in bank 20,621,172 19,339,232

20,621,600 19,339,732

Short term investments with a maturity of 90 days 395,136 –

21,016,736 19,339,372Short term investments mature October 2014 and bear interest at 6%.

2014 2013

$ $

(Restated)

Trade receivables 6,772,650 6,843,447

Less: provisions for impairment of trade receivables (3,751,916) (4,045,072)

Trade receivables, net 3,020,734 2,798,375

Other receivables 547,843 478,904Prepayments 85,978 66,613

633,821 545,517

3,654,555 3,343,892


The fair value of trade and other receivables approximates the carrying values.


The quality of trade receivables are summarised as follows:

2014 2013

$ $

(Restated)

Trade receivables

Neither past due nor impaired 1,044,323 2,225,269Past due but not impaired 1,976,411 573,106Impaired 3,751,916 4,045,072

Gross 6,772,650 6,843,447

2014 2013

$ $

(Restated)

Up to 1 month 385,132 –1 to 2 months 46,125 –Over 2 months 1,545,154 573,106

1,976,411 573,106

Trade receivables that are less than three months past due are not considered impaired. These relate to a number of independent customers for whom there is no recent history of default.

The aging of trade receivables that are past due and not impaired is as follows:


Note 6 Trade and other receivables… continued

37 37

2014 2013

$ $

At October 1, 4,045,072 2,594,335Provisions made during the year 842,594 1,824,125Recovered during the year (1,128,762) (373,388)Written off during the year (6,988) –

At September 30, 2014 3,751,916 4,045,072

2014 2013

$ $

Loans and receivables

Debt securities - unlisted 4,446,658 4,286,217

2014 2013

$ $

(Restated)

Up to 1 month – 9,762Over 2 months 3,751,916 4,035,310

3,751,916 4,045,072

The individually impaired receivables mainly relate to customers, which are in unexpectedly difficult economic situations. It was assessed that a portion of the receivables is expected to be recovered.

The aging of trade receivables that are impaired is as follows:

Other receivables do not contain impaired assets.

The maximum exposure to credit risk at the reporting date is the fair value of each class of receivablesmentioned above. The Authority does not hold any collateral as security.

7 Provision for impairment of trade receivablesThe movement in the provision for impairment of receivables is as follows:

8 Investment securities

The creation and release of provision for impaired receivables have been included in general and administrative expenses in the statement of comprehensive income and expenditure. Amounts charged to the allowance account are generally written off, when there is no expectation of recovering additional cash.

The weighted average effective interest rate on debt securities at September 30, 2014 was 3.62% (2013 – 5.05%). Debt securities mature between October 2014 and September 2015.


Note 6 Trade and other receivables… continued


9 Property, Plant and Equipment


FurnitureFixtures and

Fittings$

Computerand

Peripherals$

OfficeEquipment

$

MotorVehicles

$

SpectrumEquipment

$

LeaseholdImprovement

$Total

$

At October 1, 2012

Cost or valuation 280,127 585,444 228,683 3,180,185 2,493,050 70,270 6,837,759Accumulated depreciation (140,191) (489,583) (178,904) (2,491,723) (2,334,272) (5,419) (5,640,092)

Net book amount 139,936 95,861 49,779 688,462 158,778 64,851 1,197,667

Year ended September 30, 2013

Opening net book amount 139,936 95,861 49,779 688,462 158,778 64,851 1,197,667Additions – 74,892 15,615 – – 17,380 107,887Depreciation charge (14,006) (48,716) (16,500) (265,129) (118,779) (1,637) (464,767)

Closing net book amount 125,930 122,037 48,894 423,333 39,999 80,594 840,787

At September 30, 2013


Net book amount 125,930 122,037 48,894 423,333 39,999 80,594 840,787

Year ended September 30, 2014

Opening net book amount 125,930 122,037 48,894 423,333 39,999 80,594 840,787Additions 3,180 47,712 9,806 – 2,896 – 63,594Disposals – (781) (1,696) – (368) – (2,845)Depreciation charge (14,020) (45,475) (12,654) (126,876) (38,267) (351) (237,643)

Closing net book amount 115,090 123,493 44,350 296,457 4,260 80,243 663,893

At September 30, 2014


Net book amount 115,090 123,493 44,350 296,457 4,260 80,243 663,893

During the year the Authority disposed of assets valued at $9,208 (2013 - $27,669).

39 39

10 Trade and Other Payables

11 Contributed Capital

Contributed capital represents contributions received from the five OECS governments and the CDB under the World Bank Agreement for the funding of the OECS Telecommunications Project. Upon completion of the Project the assets were transferred to the Authority with the responsibility of managing and monitoring the Telecommunication sector in the respective Member States.


2014 2013

$ $

Trade payables 17,085 85,153Accrued expenses 672,434 788,637

689,519 873,790

2014 2013

$ $

St. Lucia 5,286,673 5,286,673Dominica 3,364,935 3,364,935Grenada 5,268,673 5,268,673St. Kitts and Nevis 5,268,673 5,268,673St. Vincent and the Grenadines 4,071,903 4,071,903Caribbean Development Bank 218,700 218,700

23,479,557 23,479,557

Less:Cumulative expenditure prior to assumption of Project (10,524,981) (10,524,981)Amortisation of capital contribution (4,655,257) (4,492,510)

(15,180,238) (15,017,491)

Contributed capital at year end 8,299,319 8,462,066


12 Spectrum fees, net

13 Other income, net

2014 2013

$ $

Gross spectrum fees 10,912,276 11,457,146

Less spectrum fees distributionSt. Lucia (842,784) (782,220)Dominica (818,060) (766,933)Grenada (874,456) (811,045)St. Kitts and Nevis (714,960) (680,645)St. Vincent and the Grenadines (922,261) (890,210)

(4,172,521) (3,931,053)

Spectrum fees, net 6,739,755 7,526,093

Spectrum fees distribution represents disbursements to the National Telecommunication Regulatory Commissions (NTRC) of the five Member States to meet their operational expenses. The NTRCs monitorand collect spectrum fees from the telecommunication service providers in their respective territories onbehalf of the Authority.

2014 2013

$ $

Interest income 329,154 549,405Other (expenses)/income (11,041) 1,490(Loss)/gain on disposal of property plant and equipment (2,845) 300

315,268 551,195


41 41

14 Expenses by nature

2014 2013

$ $

Spectrum fund distributions (Note 12) 4,172,521 3,931,053Employee benefit expense (Note 15) 2,320,854 2,478,846Bad debt expense 676,931 1,818,199Legal and professional fees 387,188 154,283Training 359,201 214,897Project meetings 248,062 307,423Depreciation (Note 9) 237,643 464,767Utility 117,136 121,352Board dues 96,950 111,400Travel 93,914 74,283Insurance 81,063 82,477Security expenses 54,784 48,230Repairs and maintenance 52,971 36,063Advertising and public campaign 37,096 15,237Audit fees 30,775 31,768Telephone and network expenses 24,766 25,945Computer costs 18,590 10,434Dues and subscriptions 13,857 29,612Bank charges 10,591 8,404Other expenses 113,600 176,433

Total spectrum fees distributions andadministrative expenses 9,148,493 10,141,107




2014 2013

$ $

Salaries and wages 1,800,989 1,973,774Social security costs 112,975 120,592Gratuities 329,972 347,689Other staff costs 76,918 36,791

2,320,854 2,478,846

15 Employee benefit expense

16 Comparative period adjustment

The comparative period has been restated to conform with the change in presentation of the advance billingsto customers for services not yet performed. Previously the Authority reported the advance billings onservices not yet performed in trade receivables with the corresponding balance included in advanced deposits.This resulted in the following adjustment:

2013

$

Trade and other receivables

As previously reported 5,410,320Adjustment (2,117,305)

As restated 3,343,892

Advance deposits

As previously reported 2,659,533Adjustment (2,117,305)

As restated 542,228

43 43

NOTES

44 ANNUAL REPORT 2014 EASTERN CARIBBEAN TELECOMMUNICATIONS AUTHORITYANNUAL REPORT 2014 EASTERN CARIBBEAN TELECOMMUNICATIONS AUTHORITY

NOTES

Table of Contents

E

ASTE

RN CAR IBBEAN

TE

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CO

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U

T HO

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rebmuNegaPdraobpilC

21 Report on the Operations of ECTEL 2013-2014 22 The Work Plan

22 Programme Implementation and Achievements

24 Regulation and Governance

24 Training and Human Resources Development

25 Regional Collaboration

25 Finance

25 Challenges

25 Acknowledgements

26 Financial Report 27 Balance Sheet

28 Statement of Comprehensive Income and Expenditure 29 Statement of Cash Flows 30 Notes to Financial Statements General information

34 Financial risk management Critical accounting estimates and judgements 35 Cash and cash equivalents Trade and other receivables 37 Provision for impairment of trade receivables Investment securities 38 Property, Plant and Equipment 39 Trade and Other Payables Contributed Capital 40 Spectrum fees, net Other income, net 41 Expenses by nature 42 Comparative period adjustment

EASTERN CARIBBEAN TELECOMMUNICATIONS AUTHORITY

Vide Boutielle,P.O. Box 1886

Castries, Saint LuciaTel: (758) 458 1701/1702

Fax: (758) 458 1698Web: www.ectel.int

[email protected]

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