DCDT, ICASA, FPB, BBI, USAASA/USAF, Sentech, SITA, .ZADNA, NEMISA, SAPO & SABC 2022/23 Annual Performance Plans; with Ministry

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Communications and Digital Technologies

03 May 2022
Chairperson: Mr B Maneli (ANC)
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Meeting Summary

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Communications
ICASA
USAF
SITA                                                                                                    
ZADNA                                                                                                

In a virtual meeting, the Committee, the Department of Communications and Digital Technologies and its entities met to discuss the Annual Performance Plans (APPs) and budget for the 2022/23 financial year. High level overviews of each APP were presented.

The Committee indicated that it will conduct oversight and do its best to support the Department and the different entities.  It asked the Film and Publications Board (FPB) what the terms are of its partnerships and what their monetary value was. It then asked the FPB about its customer targets and how and why it only achieved 60%. Members highlighted that public funds are used and must be used with the highest level of accountability. The Committee indicated that certain information in the presentations was different to the information it received. It cannot adopt reports with different information. Concerns were raised about the high staff turnover at ICASA and the entity was asked what the causes were.

Broadband Infraco (BBI) was asked what the causes of the risk factors were and what measurements it will put in place to respond to the risk factors because the presentation did not indicate the responses.

Sentech was asked what the causes were for its loss of customers and its inability to acquire new customers.

The Committee asked the South African Broadcasting Corporation (SABC) what the causes were for its risk factors and what it planned to do to address them and the Auditor-General’s (AG's) findings.

Members indicated that the SABC must look to solve all the AGs findings because it will have a huge impact on the financial performance of the SABC. Members raised concerns about the 277% increase in the SABC’s marketing budget and ask what the reasons for this were. The SABC was then asked what sports rights it will pursue in the new financial year. The SABC was asked to elaborate on its differences with the Minister and how they were resolved.

Members indicated that the targets set are reasonable and that the Department and the entities had a long period to deliberate. The Department and its entities must implement all its targets.  

ICASA was asked to elaborate further on its litigation issues and discuss its engagements with other stakeholders regarding the spectrum auction.

One Member urged the Committee to engage with National Treasury and determine ways in which it can assist the South African Post Office (SAPO).

SAPO was asked to elaborate on how it integrates with the district model because it is a Community-Based Service (CBS). The Committee indicated that in previous engagements issues were raised about the financial sustainability of SAPO and asked if its financial status had improved. 

Meeting report

Opening remarks
The Chairperson opened the virtual meeting by welcoming Committee Members, the Department of Communications and Digital Technologies (DCDT) and entities present. He wished all Muslims well as they were celebrating Eid.

He took the Committee through the agenda of the meeting.

Department of Communications and Digital Technologies Annual Performance Plan 2022/23
Deputy Minister, Mr Philemon Mapulane, took the Committee through the Annual Performance Plan (APP) of the DCDT.

In total, the Department had 36 APP targets for the year.

Total allocation over the Medium Term Expenditure Framework (MTEF) amounts to R7.7 billion - 70% of the budget allocated to transfers to entities.

See attached presentation for priorities for the Department for the year.

ICASA Annual Performance Plan 2022/23

The Committee was taken through a high level summary of the entity’s APP. The APP highlighted the following risk factors: litigation, high staff turnover, and fragile industrial relations environment, lack of leadership continuity /fixed term contracts and potential instability due to rationalisation.

See attached presentation for further detail.

Film and Publications Board Annual Performance Plan 2022/23

The Film and Publications Board (FPB) said there were declining trends in materials submitted for classification since 2017and fluidity of the online content distribution platforms but overall industry growth and revenue opportunities.   The operationalisation of the FP Amendment Act occurred on 1 March 2022. The FPB is working towards transforming as a future online content regulator

See attached presentation for further detail on the strategic focus priorities of the entity.

Total revenue is projected to grow from R111.8m (to be audited) FY2022 to R125.0m in FY 2023. Taking note that all strategic deliverables of the entity may not be funded by the government grant and subsidies, the entity is seeking to increase the percentage of self-generated revenue as a percentage of total revenue as well as the reprioritisation of existing funds. The entity has embarked on a Revenue Enhancement Strategy to enhance revenue streams outside of the government grant and subsidies. In FY 2021, self-generated revenue consisted of 6% of the total annual revenue and it has grown to 10% of total annual revenue in FY2022. The goal in FY 2023 is to increase self-generated revenue to 18% of total annual revenue.
 

Broadband Infraco Annual Performance Plan 2022/23

The Committee went through the APP of Broadband Infraco (BBI). Its sales strategy focus is on retaining its customers and acquisitions through business development activities. It planned to engage in strategic relationships joint for Go-to-Market (GTM), co-product development positioning. BBI developed retention strategies to keep the existing Southern African Development Community (SADC) whilst it plans to extend its network connectivity further north in the African continent. Based on the SA Connect project it is a key player and plans to leverage this to key departments and local government offices to boost revenue. It also planned to increase its reach through major channel partners.  

Universal Service and Access Agency of South Africa Annual Performance Plan

The Committee was taken through the revised APP of the Universal Service and Access Agency of South Africa (USAASA). There were new APP targets added.

See attached presentation for further detail

SENTECH Annual Performance Plan 2022/23

The Committee went through a high level summary of the APP.

See attached presentation for further detail

National Electronic Media Institute of South Africa Annual Performance Plan 2022/23

The Committee went through the APP of the National Electronic Media Institute of South Africa (NEMISA). Strategic focus areas of the entity included:
1. Human capital capacity: NEMISA will prioritise the filling of vacant positions, upskilling the current staff and maintaining employee wellness
2. Advancing NEMISA as an institution: marketing NEMISA brand and its offerings, reviewing the value proposition, digitalisation of NEMISA, strengthen research and development, establishment of new revenue generation sources and improving the organisation’s performance management system and the monitoring and evaluation system
3. Organisational change: efficiently manage organisational change and implement organisation culture change projects. 
4. Partnerships: considering its limited resources NEMISA will forge strategic partnerships that will enable the advancement of its mandate
5. Basic education and post-schooling sector: to realise its mandate NEMISA believes that the basic education and post schooling sectors will yield the desired results in creating an information society.
6. SMME digital entrepreneurship: noting that the SMMEs are key to the economic recovery of South Africa, NEMISA will focus on empowering small businesses to participate in the digital economy.
7. Creative media and broadcasting: NEMISA will improve its focus on the creative media and broadcasting industry noting that this is the original mandate of NEMISA and the need to renew NEMISA’s contribution to the industry.

See attached presentation for performance targets and risks.

ZA Domain Name Authority Annual Performance Plan 2022/23
In 2022 ZADNA will:
Finalise the registry-registrar licencing framework, conducting public participation.
Member-driven engagements.
Thought leadership through research chairs.
Industry qualification for the DNS space
Enable and become a pivotal participant in the digitisation of the informal economy

See attached presentation for strategic outcomes  

State Information Technology Agency Annual Performance Plan 2022/23

The State Information Technology Agency (SITA) presented its APP to the Committee.  SITA said the COVID-19 pandemic which is persisting for nearly two years has profoundly impacted the digital landscape of South Africa (SA) and by default still positively impacts SITA’s strategic direction. The overall result is that the general need by citizens to access government services through digital platforms is more prominent than ever before which compels government to embrace the accelerated pace of digital transformation and adopt new technologies. There is therefore an urgency to accelerate the implementation of policies and programmes aimed at bridging the digital divide which is also highlighted as a contributing factor to worsening the socioeconomic status of SA. The ICT sector remains an enabler of growth and job creation; therefore, SITA’s role as an organ of state becomes more apparent and very relevant within the context of the Fourth Industrial Revolution. SITA will leverage the existing appetite for digital technologies in partnership with the ICT ecosystem to augment its capability to meet the customers’ demands while also adopting a pricing model that considers diverse customer needs.


See attached presentation for programme targets   

Revenue for the FY2022/2023 is estimated at R5.917billion. This is an increase of 4% as compared to the forecast of the FY2021/22. The increase in revenue will be achieved through business development, harnessing more value and achieving a larger share of the current approved ICT spend.

South African Broadcasting Corporation Annual Performance Plan 2022/23

The SABC presented its corporate plan. The plan maintains the focus on realising the goals of six strategic pillars that make up the SABC strategic roadmap.

Regarding the turnaround plan, there are 120 key actions. Of these, 15 relate to legislative and regulatory changes. See presentation for progress on the turnaround plan.

See attached presentation for budget, risks and challenges and strategic objectives.    

South African Post Office Annual Performance Plan 2022/23

See attached presentation for budget and detail on the performance indicators.     

Discussion

The Chairperson granted the Committee the opportunity to pose questions and relayed that Ms Z Majozi (IFP) had sent a formal apology. The Committee will wait for confirmation of Ms Majozi’s leave of absence.

Mr T Gumbu (ANC) commended the presentations made and asked who the strategic partners of the FPB were. He then asked what the terms are of the partnership and what its monetary value is.

Ms T Bodlani (DA) expressed that the targets set in the presentations are reasonable. She told the entities that the Committee will conduct oversight and do its best to support them and the Department. The funds that are being used are public funds and must be used with the highest level of accountability.

The presentation delivered by ICASA was not the same as the presentation that the Committee received. She then raised concerns about the high staff-turnover ICASA. With the high demand of communication specialists, government will turn to train these specialists. The private sector will allow this because government is not competitive in regards to salaries and benefits for specialists. She asked ICASA what the reasons were for the high staff turnover.

The presentation of USAASA was also not the same presentation that the Committee received. She raised concerns about the quarter three risk and management targets of USAASA. One report states 10% and another report states 50%. The Committee cannot adopt a report that has a number of differences. She then asked USAASA to provide clarity on the matter.

Mr M Basopu (ANC) also commended the presentations and highlighted the risk factors identified by BBI. He asked BBI what the causes were and what measurements it will put in place to respond to the risk factors because the presentation did not indicate the responses.

He asked Sentech what the causes were for its loss of customers and the inability to acquire new customers. He said that Sentech did not indicate how it planned to address its risk factors. To make an informed decision the Committee needed to know all the issues.

He asked the SABC what the causes were of its risk factors and what it planned to do to address them. He then asked the SABC what it planned to do about the AG's findings.

Mr S Malatsi (DA) added to Mr Basopu’s comments that the SABC’s target to resolve 80% of the AG’s findings is too modest. The SABC must look to solve all the AG’s findings because it will have a huge impact on the financial performance of the SABC. The SABC’s marketing budget for the previous financial years accumulated to R38 903 and increased by 277% for the 2023/24 financial year. He asked the SABC what the reasoning was for this massive increase in its marketing budget. The SABC identified four targets in regards to sport rights. He then asked it to elaborate on the four targets set because it will be useful to note which avenues it planned to go into to grow its financial revenue. 
           
Ms N Kubheka (ANC) said that she hopes that Parliament will provide Ms Majozi with special leave. The Department and the entities had a lot of time to deliberate on its targets and the Committee expects all the stakeholders to deliver on its targets without any issues. She asked ICASA to elaborate on the issues of litigation because it requires a large sum of money. She then asked it to discuss its engagements with other stakeholders on the issue to deliver ‘spectrum’.

Addressing the FPB, Ms Kubheka asked how it achieved 60% customer service and what the challenges are stopping it from achieving 100%.

Community interactions and service delivery to rural areas are the core functions of SAPO. SAPO has developed a strategic plan to address the service delivery issues for the entire country, however the budget might not be enough. She urged the Committee to assist SAPO as it has assisted the SABC. She suggested that the Committee engage with Treasury and determine ways in which it can assist SAPO as soon as possible.

The Deputy Minister indicated that it is the final year that government is assisting the SABC. He asked the SABC to assure the Committee that it will handle its own finances because government allocated it R3.2 billion. If it is not the case the SABC should indicate where it will encounter issues going forward.

Mr L Molala (ANC) commended ICASA for reducing litigation costs and asked if the engagements compromised the target of government in terms of ‘spectrum’.

 He asked SAPO to elaborate on how it integrated with the district model because it is a Community-Based Service (CBS). This will inform the Committee on the role of SAPO in regards to reporting and service delivery in districts. In previous engagements issues were raised about the financial sustainability of SAPO. He asked what its financial status is and if it has improved.

The SABC has had differences with the Ministry and however these were resolved. He asked the SABC what these differences were and how they were resolved because these issues might arise again. The SABC’s answer will inform the Committee on how the issues were resolved.

Responses

ICASA response
Dr Keabetswe Modimoeng, Executive Chairperson, ICASA, appreciated the compliments made by the Committee. Replying to the question about the high staff turnover he said that it is a major concern, however it is not a new issue. In the last seven years, the presentations by ICASA highlighted the concern about the high staff turnover. The reason for the high staff turnover is because ICASA is a training ground and is a fast-paced working environment in its industry and this is shown in its APP. ICASA creates fertile ground for industry stakeholders to steal its workforce because it cannot match what other stakeholders offer. If the Committee engages with the leading broadcasters in the country it will be found that there is an employee that occupied a role at ICASA previously. It is also found that when the term of an executive member of ICASA ends they would normally reapply, however this is no longer the case. Previous employees of ICASA were confronted with better opportunities in the industry. He reiterated that ICASA noted the concerns about the high staff turnover.

He replied to the questions about the ‘spectrum’ auction that all the settlement grounds entered with Telkom is public knowledge. He reiterated that no settlement grounds were reached in secret. He highlighted the comments made by Mr Molala and said that no settlement grounds were compromised in any way. ICASA estimated before the auction it will raise R8 billion and the auction ended up raising R14.4 billion with an unsold lot which had a reserve price of around R1 billion. The country is in a much better position than anticipated because the auction raised more than what was expected. The first settlement grounds include the unsold lot and ICASA will issue an information memorandum by June 2022 to solicit public input and stakeholder comments. This will lead ICASA to licensing the unsold ‘spectrum’. The consultation process does not only include Telkom but all stakeholders that want to be involved in the process. The second settlement ground stresses that ICASA must look into the Secondary Law Spectrum Market (SLSM) and all the ‘spectrum’ arrangements around sharing, roaming or pulling. It looked into it relation to the Mobile Broad-Brand Service Inquiry (MBBSI). It released its findings and it was found that it needed to look further into the SLSM. He reiterated that no other settlement grounds were agreed upon. He said that ICASA conducted the process in this manner because of its philosophy to mediate. It did not want to incur more legal costs when settlements can be reached by both parties because taxpayers money is being used. It is currently conducting an audit on which spectrums it can include in the process. He indicated that he did not want information to be misinterpreted and said that spectrums belonging to the Wireless Open Access Network (WOAN) will not be included in the process or be auctioned. Parliament decided to temporarily suspend the WOAN policy directive to allow further inputs from the public and all stakeholders to enhance the WOAN business case. He urged all Members and the public to take part in the engagements going forward.

SABC response
Mr Bongumusa Makhathini, Board Chairperson, SABC, replied to the question about the disagreements with the Minister saying that there was no disagreement. The SABC engaged with the Ministry regarding the pace of registration and installation of the ASO. The SABC and the Ministry are aware of the importance of protecting the audience of the SABC. The protection and growth of the audience will allow SABC to improve its current situation. It assured the Minister that it will find solutions to the issues raised and fulfil its role as the public broadcaster. It needed to look at the opportunities and the risks associated with digital migration. The SABC needs to play its role in creating compelling content and getting the public to register for digital migration. He said that Sentech is tasked with the set-top box rollout, registration and installation.

He replied to the concerns raised about the improvement of the SABC that if the operational, regulatory and policy matters are resolved the SABC will be sustainable. The turn-around strategy needs to be fully harnessed and implemented for it to be successful. The SABC has suffered for decades because of the unfair regulatory and policy framework that advances the dominant stakeholders at its expense. It raised a number of concerns that needed to be addressed for it to be protected and its democracy to be advanced. One of the concerns spoke to the household levy which will allow indigent households to be excluded from payment. It proposed that the dominant stakeholders play a role in the collection of the household levy because this will be one source of funding for the SABC. The SABC also raised concerns regarding unfunded mandates which accumulate to billions. It will not be financially sustainable if this issue is not addressed. Mr Makhathini then said that the entity appreciates the exemptions that it was given through the Public Finance Management Act (PFMA). It will speed up the process to procure compelling content because red tape issues prohibit it to take the opportunities that are presented. It works in a competitive environment whereby other organisations that are restricted will take the opportunities before the SABC can. The Ministry and the Minister of Finance who assisted it with exemptions for a year will be crucial for the SABC. He assured the Committee that the SABC did not exhaust all its funding to procure compelling content yet. As the executives continue to look for quality content it will be able to bridge the gap and gain the confidence of its advertisers and audiences to ensure that the SABC is sustainable.

Mr Madoda Mxakwe, Group Chief Executive Officer (CEO), SABC, replied to the question about the increase of expenditure on advertising, that it is from a low base. For many years the SABC did not adequately invest in its brands. It increased expenditure because it wanted to ensure brand equity and to promote its brand on its different channels including radio stations. The increase will also ensure that it increases audience ratings and revenue generation.

He then replied to the question about its risk factors that it developed a robust sales model that deals with the need to generate revenue. The SABC recorded that this model will be profitable in two quarters which shows that the model is working. The micro-economic impact of the pandemic has caused brands not to advertise through the SABC and it lost R160 million in investments. The outdoor broadcasting events were not viable because of Covid-19 restrictions and this caused it to lose R60 million. It further lost an additional R50 million because no live events were hosted. Another risk factor is the decline in audience numbers which caused the SABC to lose R600 million. He reiterated that the new structure and operating model that is implemented are working.

He replied to the question about the SABC’s content that its license does determine the content that broadcasts. 63% of the SABC’s broadcasting is determined by its license conditions and its competitors are not restricted in this regard. He added to Mr Makhathini’s comments about the exemptions, that with it the SABC managed to procure 163 new programmes in the last two quarters. The exemptions will ensure that it increases audience ratings and financial sustainability. He then said that it is important to invest in marketing to ensure equity in branding, create programme awareness and audience growth.

Ms Yolande van Biljon, Chief Financial Officer (CFO), SABC, replied to the question about the AGs findings saying that the entity is on track to meet the targets for resolutions of the AG’s findings. It achieved 90% of the AG’s findings and because certain findings are system and policy-related which are multi-year findings, it is, for this reason, the SABC opted for achieving an average of 80% of the AG’s findings. The SABC implemented automated-tracking systems to ensure that the AG’s findings will get the necessary attention it needs. There are various reporting mechanisms in place to ensure oversight on the ground level.

Responding to the question about sport rights, she said that it will always be a national interest. She then replied to the question about the certain risk factors that within its market supply and demand are not matched. As a State-Owned Entity (SOE) it must compete with stakeholders from the private sector. She then said that the SABC did have the budget to compete with stakeholders from the private sector.

FPB response
Mr Mashilo Boloka, Chief Executive Officer, FPB, replied to the question about its partnerships, saying that it comprises two areas. The first area is non-regulatory functions which is an area where it raises public awareness and education on the work it does. It has partnerships with Childline South Africa regarding the protection of children. There is no rent-value centre because the partnership is aligned with its mandate to protect children. The second area covers an organisation called the International Association of Internet Hotlines (IAIH) which also alludes to the protection of children from harmful content. It pays an annual membership fee of 6 300 Euros to the IAIH. This second area deals with enforcement, whereby it requires the police and the National Prosecuting Authority (NPA) to assist with enforcing its mandate. He said because it is a domestic partnership no cost is being accumulated. Another critical area looks into the technological overlaps and locally it has a partnership with ICASA and other organisations. He then said that it also has continental partnerships with organisations that have similar mandates because it is transnational. No costs are accumulated because the partnerships work in a complementary and collaborative manner.

He replied to the question about the customer levels that the FPB has. On 1 March 2022, the Films and Publications Amendment Act (FPAA) took effect which increased in ‘three-folds’. The FPB is currently in a transitional phase and it is busy transforming. This is what strategic area one focuses on and this means that it needs to build resources and regulatory instruments. The 60% customer level is derived from the historical narrow mandate. Going forward the FPB will try to build it as a fully pledged regulator and the strategic plan for the medium-term indicates that customer levels will increase significantly. He then said that it will increase because going forward it will have all the required resources to move to the next level. He said that it provided the Committee with the historical statistics because it wanted to show how it will transform and tried to identify the regulatory pressure points.

SAPO response
Mr Sipho Majombozi, Acting Deputy Chairperson, SAPO, replied to the question about the funding saying that it can only move forward with an increase in funds.

He then replied to the question about the District Development Model (DDM) which had identified three areas, Mthatha, Durban and Mokopane. These areas are part of the South African Connect Project (SACP) and will be rolled out in the entire country.

BBI response
Ms Leah Khumalo, Chairperson, BBI, replied to the question about the low staff morale that is caused by the moratorium. The BBI Board requested that the exit interviews of its senior staff be conducted and then the low staff morale was discovered. BBI plans to engage with the Ministry to establish ways to mitigate its issues and allow the appointment for specific positions. The current recruitment process is a burden on its budget because it must pay the head-hunting organisations and the entire procurement process.

Mr Andrew Matseke, Chief Executive Officer, BBI, replied to the question about risk factors saying that the reason for customer defections is the network underperformance in certain parts of the country. The cause of network underperformance is vandalism and theft of network infrastructure. To respond to these issues it planned to establish backup routes. This is done to ensure that when there is a breakage in ‘Route A’ then data traffic can be diverted to another route. Linked to these backup routes is the ability to invest in the infrastructure of BBI as mentioned in the presentation made by the Department.

He replied to the question about other risks identified, saying that it has not been able to adapt to changes in the market because of historical under-investment in the network. To mitigate this risk, it planned to have a detailed network investment plan which is included in the corporate plan it submitted. It also planned to modernise and increase the network solutions it offers to the market. He then said that it will partner with other stakeholders in the market to repackage its offers to the market.

Sentech response
Ms Sedzani Mudau, Chairperson of the Board, Sentech, replied to the question about the loss of customers saying that this issue is its main priority because it relates to revenue diversification. Due to the shift to the ASO there was a decline in its revenue. As indicated in its APP the main priorities are getting new customers for its Over-the-Top Television (OTT) platforms and to ensure that this risk factor is mitigated.

Mr Mlamli Booi, Chief Executive Officer, Sentech, emphasised that it identified a risk that it might not be able to fully utilise the digital infrastructure. He then said that it is because it is only supplying services to the wholesale market and because there is a limited number of broadcasters that are licensed. The digital infrastructure has the ability to take on more broadcasters. To mitigate the risk factors identified it will continue to manage its customers. Sentech is committed to evolving to an entity that provides wireless broadband technologies and adding new customers in this area of business.

USAASA response
Ms Chwayita Madikizela, Acting Chief Executive Officer, USAASA, replied to the question about the risk targets, explaining that it is focused on reducing and maintaining its risk factors by 60%. For quarter two, it planned to achieve 40% and during the other quarters, it will achieve a total of 60% as the Committee identified. She then said that it could not include all the risk factors because the risks are strategic in nature. The USAASA will also focus on the dissolution risk factors which also makes the risk factor targets cumulative. She noted that the Deputy Minister did not table the revised target and that USAASA will wait for further guidance in this regard.

Deputy Minister response
Deputy Minister Mapulane replied to the question about the different presentations. The information the Department shared with the Committee comes from the entities. He said that it is the same information, however the Department summarised it in the presentations. He then said that if there are any specific issues the Committee wanted to raise it can do so.

He added to the comments of ICASA that it needed to be commended for conducting the public auction regarding the spectrums. The litigation was instituted by Telkom posing the significant risks to the auction process that was finalised. ICASA also needed to be commended for reaching a settlement which removed all risks. He emphasised that the public differences between the Minister and the SABC are ‘regrettable’ because there is sufficient channels that exist between the Department and the Committee to resolve the differences. He reiterated that the differences were around the digital migration and the pace of the ASO. This is a very important matter since the President announced the ASO and digital migration because it is a policy standpoint of government. He commended the Committee for supporting the Department’s quest to salvage SAPO and to ensure it receives the necessary budget allocation which will be announced by the Minister of Finance.

Further discussion     
The Chairperson said SAPO needed to elaborate on its responses given. He asked if there was an agreement in place between the Department, Ministry and SAPO on its corporate plan for building its future. He asked if there is an agreement in place. Is this included in the APP because this is what the Committee is approving? The explanation given will give the Committee an indication of where more support is needed regarding the finances or if a transactional advisor is needed. Treasury will need to know about any conditions regarding the agreements of SAPO because it will delay the budget allocations.

He asked the SABC to provide the Committee with more clarity regarding the ASO because this is done in collaboration with Sentech. The APP of the SABC targets 100% ASO, however the Set-Top Boxes as indicated in the APP of Sentech are spread across quarters. He asked the SABC how this would affect the completion date of the ASO because the ruling of the court needed to be considered on the matter. The response given will indicate the readiness for the ASO and will prevent issues in the future regarding the customers of the SABC.

He raised concerns about the USAF financial model and said that quarters three and four do not have any activity in this regard. The financial model is important because it talks to the future of the subsidised market. It is good that technology is evolving, however the status of the indigent people may not change. The Committee needs to know what will take place in all the quarters of the financial model because irrespective of the name change it is still the funding model of USAF. USAASA needs to send out communications to its customers that do not need subsidies because many customers might be ready however this is no educational campaigns in this regard.

He raised concerns about the Small, Medium and Micro Enterprises (SMME) and black-empowered companies in the APP of BBI. The problem arises with the baseline information that it provides the Committee and indicates that it either maintains or reduces the number of SMMEs. From a transformation point of view, he asked what this information will entail. BBI will need to involve previously disadvantaged SMME owners and change the structure of the economy and it is for this reason that certain policies are implemented. He said that the response given will talk to all entities because in meeting targets the entity must also state what impact it had on people at ground level. Reaching targets must include the impact it had on people because the Committee wants to see challenges being resolved in the areas that the entity targets.

The Chairperson requested that the Department provide more clarity on how it measures the work done by ICASA. He highlighted an outcome of the Department’s APP that the data costs is as a result of the Competition Commission report. He asked the Department to provide more clarity on the report because it understood ICASA was involved in the inquiry. The Competition Commission would look at sustainability of the market. He then asked the Department to draw up a Memorandum of Understanding (MOU) between the Competition Commission and ICASA to ensure that the inquiry is not an issue and how it monitors the implementation of the Competition Commission report. The Department indicated in its outcomes that it will monitor the performance of the management system that relates to Councillors. He asked the Department if it signed the contract with ICASA and for this reason, M&E tools must be put into place. The response will provide clarity on the councillors it is waiting for because Parliament would have provided a list with councillors. He then asked for an update of the process because it would be to the stability of ICASA.

Responses

SAPO response
Mr Lenny Govender, Acting Chief Financial Officer, SAPO, replied to the question about the corporate plan. The plan was approved by its Board and the Department. The financials that were presented have been aligned with the strategy of SAPO. In discussions with Treasury, it was determined that there is no transactional advisor required at this stage.

USAASA response
Ms Madikizela replied to the question about the financial model. The M&E mechanisms for migrating households have been aligned with the Department in terms of percentages of installations. It will be enhanced to achieve a 100% target, however the assessments of the quarterly report on migrating households will be available for all quarters. It addresses the issue of the allocation of funding and how it assesses the reports. It remains the responsibility of USAASA to migrate households and to ensure that installations have been managed correctly. It also needs to ensure that only migrated households are funded. The M&E reports were included in its targets because the reports are important to ensure there is a correlation between the allocation of funding and the work done at ground level. This exercise will continue during the installation that is done by Sentech.          

Sentech response
Mr Booi replied to the question about the STB. It set a target of 100% installation for all the registered beneficiaries. This was linked to the ASO target by the SABC to ensure that there were no contradictions between the two APPs respectively. The 507 000 installations were pre-determined. Sentech will also conduct installations for any beneficiary registered and confirmed by USAASA because it is funding the project. The ASO is a priority of Sentech and the SABC and they are both working towards the deadlines set by the court ruling.

The Chairperson felt the CEO did not adequately address the question. The presentation indicated that Sentech has 15 targets for the 2022/23 financial year. It targeted 100% of STB installation of registered households, 20% in quarter one and 40% in quarter two. He asked Sentech to elaborate on these targets because the deadlines might not be met.

Ms Mudau replied that it is on track with the programme to ensure that by 30 June 2022 1.3 million registered households will be fully installed.  The court ruling indicated that by 30 June 2022 all the installations must be completed. There has been an increase in registrations in the areas where it conducted the ASO. The installations that will be done after June 2022 will include these registered households. Due to the continuation of additional household registrations because of the ASO it planned to install 100% of the registered households. She assured the Committee that it is on track to meet all its targets set for 30 June and that new registrations are dealt with accordingly.

Mr Booi added that it set the target of 507 000 installations because it was part of the ruling set by the court. Sentech is fully committed to reaching this target and installing all new registrations by the end of the financial year.  He emphasised the points made by Ms Mudau that Sentech is on the right track to achieving its targets.

BBI response
Mr Matseke replied to the question about the transformation targets by comparing the APP targets and the baseline information. He said that it targeted 70% of black empowered organisations and the baseline target of 105% is an exception as a result of the Capital Expenditure (CAPEX) not being fully utilised in the previous financial year. It did not expect that the CAPEX will not be used and could not set a target of 105%. He said that BBI noted the comments made by the Chairperson and will incorporate the socio-economic impacts into its targets.

Department response
Mr Omega Shelembe, Deputy Director-General (DDG): SOE Oversight, DCDT, replied to the question about the M&E of ICASA. According to the target of its APP it planned to go into the agreements with the councillors in the first quarter. It is a first quarter target because ICASA still needs to conduct a workshop with the Department in relation to the performance and management assistance framework. This will ensure that the roles of ICASA and the Department are clear according to the framework. The Department will also facilitate the signing of the performance agreements. According to the legislature, the Minister must appoint an M&E panel to conduct the assessment of the performance and this report will be submitted to the Minister and then Parliament.

ICASA response
Dr Modimoeng added to the comments of Mr Shelembe that the delays were caused by the changing of Ministers. He assured the Committee that it is on track with its targets and after the workshops are conducted the process will be concluded.

Mr Willington Ngwepe, Chief Executive Officer, ICASA, added to the previous comments made that it concluded the inquiry made into mobile broad-band. It published the findings and regulations at the end of March 2022 because one deliverable was included in the previous financial year. Included in the findings four markets have been identified and which licences are crucial in those markets. The four markets included the retail, wholesale and site infrastructure, national roaming and upstream markets.  ICASA also imposed obligations on the markets, whereby it must provide ICASA with detailed prices of its retail prices quarterly. He then said that it will evaluate the retail and wholesale prices and where it is found that retail prices are lower in certain cases it will request detailed information. There will be a continuation of the monitoring process because it will be provided with information quarterly. It outlined that this process along with the process of the Competition Commission were similar and complimentary. The Competition Commission completed its process, however ICASA still needed to conduct a detailed market assessment. It will continue to monitor the pricing of the markets and will report to the Competition Commission if there is a breach of policy in this regard or hold the organisations accountable according to its own policies.

Deputy Minister response
Deputy Minister Mapulane replied to the question about the SAPO figures presented saying that they are aligned with the figures in its strategy. SAPO is faced with liabilities worth R4.2 billion which must be paid to different creditors. The Department is waiting on Treasury to confirm that it will assist SAPO with its liabilities. SAPO sent the request to Treasury containing what it requires to ensure that it is financially stable. He said that there is currently no conditions because Treasury has not yet allocated any funds. This will be a public process and will be tabled to Parliament. He said that a team should be established comprising of different officials, similar to the team that established the turnaround strategy of the SABC.

Deputy Minister Mapulane added to the comments made on the ASO that it issued out a call to all South Africans to register their households. He then said that it conducted communication drives, however people will not adhere until the ASO happens. The Department and its entities are committed to conduct the installations of all registered households. As indicated in the APP of the Department it needs to implement all the findings of the Competition Commission inquiry on the cost of data. The Department and the industry must work together to ensure that the cost of data decreases. The recent allocation of the spectrum will evidently lead to the cost of communication decreasing. 

In replying to the question about the impact on people the targets of the Department must have an impact on communities and the extent of the impact is subject to the M&E processes. The relevant stakeholders will compile a report on the M&E processes and present it to Parliament.

Report of the Portfolio Committee on Communications on the filling of two vacancies on the Media Development and Diversity Agency (MDDA) Board
The Committee briefly considered a previously adopted Committee report but which required re-adoption after a minor error was amended.

The report was adopted.

The meeting was adjourned.
    


 

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