ICASA on Spectrum Auction & Monitoring Municipal Elections; BBI underperformance; with Deputy Minister

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Communications and Digital Technologies

30 November 2021
Chairperson: Mr B Maneli (ANC)
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Meeting Summary

In a virtual meeting, the Independent Communications Authority of South Africa (ICASA) updated the Committee on the spectrum licensing process, and the monitoring of the 2021 municipal elections. This was followed by a briefing by Broadband Infraco (BBI) on its financial performance; the issue of cyber security as highlighted by the Auditor-General of South Africa (AGSA); and the process towards the merger between the BBI and Sentech.

ICASA reported that it had embarked on the first Information Memorandum (IM) of public consultations regarding the spectrum licensing process, followed by a second round of consultations, which had closed on 30 November. The second IM consultation was to solicit further inputs from interested stakeholders, members of the public and all industry players, on how ICASA could best configure the auction. ICASA was working towards the publication of the Invitation to Apply (ITA) on an expedited basis, which would be published in December, with the closing date at the end of January 2022. The qualified bidders would then be announced, and the auction process would commence in March. The Committee heard that this process had been going well thus far, and the Department of Communications and Digital Technologies was satisfied with the way that ICASA had managed it.

ICASA had also embarked on another process to introduce Provisional Spectrum Licensing, which would commence from 1 December 2021 until 30 June 2022 -- or ending three months after the termination of the National State of Disaster, whichever came first. Through this provisional licensing process, it had raised R200m for the national fiscus over a period of seven months, which consisted of acquisition fees, application fees and the spectrum usage fees.

The purpose of the Wireless Open Access Network (WOAN) was to accommodate Internet Service Providers (ISPs) that did not have a licence. WOAN was considered as an instrument of transformation, as it enabled competitiveness and ensured that everyone could participate in acquiring the spectrum. ICASA would conduct further research between December and March and engage with other countries that had licensed the WOAN, to ensure that South Africa’s implementation would be successful.

The BBI said it had under-performed mainly because of the under-investment in critical infrastructure, as the last shareholder investment was made in the 2010/11 financial year, and it had not received any significant investment since then. The shareholder loans had been converted into equity, which had resulted in a net asset value that had significantly improved the BBI’s balance sheet. This conversion presented an opportunity for the BBI to go to the financial markets to raise the required capital to invest in critical infrastructure. It required about R1bn over a period of four years to be invested in the infrastructure. The intention was to approach development finance institutions, such as the Development Bank of Southern Africa and the Industrial Development Corporation, to raise this capital. BBI had spent a total of R460m over the past six years investing in infrastructure, but this was not sufficient. The Department believed that after the conversion, the BBI could improve its performance after the necessary investments had been made. However, it was still required to improve its operations to ensure that it moved away from the going concern status that continued to be raised by AGSA.

The merger between BBI and Sentech was still ongoing, but the goal was to finalise this process by the end of the current financial year. The two entities were working on a combined strategy as well as on the outlook – how this combined entity would look going forward. This would be completed as a deliverable before the end of the current financial year.

Meeting report

The Chairperson opened the meeting, and welcomed the Deputy Minister (DM) of Communications and Digital Technologies, Mr Philly Mapulane; the Independent Communications Authority of South Africa (ICASA); the Broadband Infraco (BBI); and all civil society and other participants on the meeting platform.

He noted the meeting was held at a time when the country was undertaking the 16 days of activism for no violence against women and children. As public representatives in various ways, Members should use their platforms to influence positive change, and as areas for drastic action to eradicate this scourge from society.

The Chairperson recognised the apologies of clashing meetings where some Members were currently accountable elsewhere.

Members had received the presentations which were taken as read for this meeting. The Committee would be briefed on two items: the briefing by ICASA on the update on the licensing of the spectrum auction process, and the monitoring of the 2021 municipal elections. This would be followed by a briefing by BBI on addressing areas of under-performance such as in information and data security, as well as financial stability.

The DM would firstly provide a brief overview of the presentations, and take the Committee into confidence on matters of public interest. Members would then get an opportunity to engage after the presentations.  

Deputy Minister’s opening remarks

DM Mapulane extended the apology of the Minister, and said he would lead the delegation from the Department of Communications and Digital Technologies (DCDT).

Overview of ICASA briefing

ICASA’s briefing would focus on the two issues as introduced by the Chairperson. The information on the licensing process had been fairly publicised. From the Ministry’s side, he expressed gratitude that the litigation instituted against this process had since been concluded. ICASA had published the truncated timetable on the final licensing of the spectrum, which would commence in March 2022. The process had been going well thus far, and the Department was satisfied about how ICASA had managed this.

On the issue of litigation on the temporary allocation, ICASA had confirmed that this had been successfully resolved, and there was currently no outstanding litigation against this process. The Department was observing how ICASA was managing the different timetables and timelines it had set for itself, but it was comfortable with the process.

The Department acknowledged that it was in the country’s interest for spectrum to be permanently allocated.

ICASA would provide more details on what it had done in the monitoring of the 2021 municipal elections. Based on its report, it did not receive many complaints during the elections on the broadcasts that took place by the different broadcasters.

BBI matters

The BBI would present on three areas: its financial performance; a reflection on the issue of cyber security, as highlighted by the Auditor-General of South Africa (AGSA); and the process towards the merger between the BBI and Sentech.

On the financial performance, one issue to be noted was that the BBI was not performing at an optimum level, mainly because of the under-investment in critical infrastructure. BBI had raised an issue that the last shareholder investment was around the 2010/11 financial year. Since then, there had not been any significant investment into BBI, and this lack of investment had resulted in its under-performance.

DM Mapulane confirmed that the shareholder loans had since been converted into equity, which had resulted in a net asset value in the BBI’s balance sheet. This conversion presented an opportunity for the BBI to go to the financial markets to raise the required capital and to invest in critical infrastructure. It had identified the need to raise about R1bn over a period of four years, which would be invested in the infrastructure. It would continue to obtain the necessary internal approvals from its board, and if the board agreed with the intention, BBI could then enter the market. The intention was to approach development finance institutions (DFIs) such as the Development Bank of Southern Africa (DBSA) and the Industrial Development Corporation (IDC) to raise this capital to invest in the critical infrastructure.

The BBI had indicated that it had spent a total of R460m over the past six years, investing in infrastructure, but DM Mapulane said this was not sufficient. The Department believed that after this conversion, the BBI should be able to improve its performance after the necessary investments had been made. It was not entirely possible to approach the national fiscus at this point, in light of the constrained fiscal environment in which BBI was currently operating. The best route was therefore to approach the financial markets to raise this capital for the necessary investment in critical infrastructure.

Issues raised by the AGSA

The Auditor-General of South Africa (AGSA) had raised an issue on the going concern status of BBI, particularly because of these loans. However, this had since been resolved and the details of this issue would be presented in the presentation.

On the issue of cyber security raised by the AGSA, the BBI had reported that almost 88% of the AGSA’s audit findings had been successfully resolved. This would therefore not present a challenge going forward.

Merger between BBI and Sentech

The merger between Sentech and the BBI was a matter that had resulted from the Presidential Commission on State-Owned Companies (SOCs). This merger would result in the establishment of the State Digital Infrastructure Company (SDIC), but this process had been ongoing for some time.

In August 2021, Minister Ntshavheni had directed that these two entities should take a different course of action to accelerate the process. Instead of preparing and amending legislation that would go through a Parliamentary process, the Minister had said the quickest and best route was to explore an option of acquisition -- that BBI should acquire Sentech. The reason for this was that in view of the enabling legislation, the BBI legislation was quite empowering, as it facilitated that the new entity could perform the activities that were performed by both the BBI and Sentech.

DM Mapulane emphasised that this matter was still ongoing within the Department, but it intended to finalise this process by the end of this financial year. It was working on this target so that the two entities could finally merge, and the existing uncertainties within these entities could be addressed.

ICASA on spectrum licensing process and municipal election monitoring

Process undertaken to date

Dr Keabetswe Modimoeng, Executive Chairperson: ICASA, said ICASA had embarked on a process to license high-demand spectrum. It had attempted to do this in March 2021, but it was litigated by various operators within the field, both on the Free-to-Air broadcasting site ETV, as well as by Telkom. It was interdicted and had embarked on out-of-court negotiations which translated into a form of a settlement, although this did not enable ICASA to proceed directly to auction.

It had now embarked on a process of public consultation – the first Information Memorandum (IM) consultations, followed by a second round of consultations which closed 30 November 2021 at 16h00. The second IM consultation was to solicit further inputs from interested stakeholders, members of the public, and all industry players, on how ICASA could best configure the auction. ICASA would post these closing dates and work towards the publication of the invitation to apply (ITA) on an expedited basis. The ITA would be published sometime in December 2021, with the closing date at the end of January 2022. Subsequent to the ITA, ICASA would announce the qualified bidders and the auction process would then commence in March 2022.

The auction, as a means of spectrum assignment, was an international best practice as it was transparent, used worldwide, and it ensured that spectrum went to the highest bidder. In this instance, the spectrum would go to whoever valued that particular spectrum project the most. Auctions were good, as they helped to determine the real value of the spectrum at a particular point. ICASA was therefore embarking on an auction process that was transparent and competitive, which would enable it to raise money for the national fiscus.

Provisional spectrum

Temporary spectrum licence had been in effect at the onset of Covid-19 in 2020, and expired on 30 November 2021. When this decision was announced in August 2021, ICASA was litigated by several industry players, despite some players such as Rain indicating that this was the correct decision. ICASA had then embarked on another process to introduce what was now known as Provisional Spectrum Licensing, which would commence from 1 December 2021 until 30 June 2022, or it would end three months after the termination of the National State of Disaster (whichever came first). Through this provisional spectrum process, ICASA had raised R200m for the national fiscus over a period of seven months. This R200m was comprised of acquisition fees, application fees, and the spectrum usage fees.

Over the past few months, when ICASA endeavoured to explain how the temporary spectrum process was not transparent or competitive, and did not derive adequate financial value for the fiscus, this had been the underlying issue it referred to. The provisional spectrum licensing regime provided spectrum to six infrastructure players, who were all accommodated; ICASA managed to attain the R200m for the national fiscus; and competition had been somewhat addressed in the interim, including issues of transparency, since all players were accommodated. This was important to note, as ICASA intended to achieve these steps in the instances when it attempted to defend the public interest.

Dr Modimoeng was satisfied that ICASA had accomplished exactly what it intended to achieve on the public interest side, without compromising or collapsing industry and commercial interest. ICASA did not regulate for market failure, or against industry -- it regulated in the public interest, which would be achieved only if industry also thrived.          

Licensing of Wireless Open Access Network (WOAN)

The WOAN was the third part of the spectrum, and it was intended to achieve the introduction of a new WOAN market player who was a wholesale operator by nature.

ICASA took the decision to conduct further research and applicable international interactions with countries that had licensed the WOAN to learn what to avoid or enhance, to ensure that the WOAN was successful in the country. This would be done during the intervening period between December 2021 and March 2022. ICASA was still committed to the WOAN, as a spectrum would be set aside for this. It would also focus on the spectrum auction during the intervening period to conclude the auction in March 2022, and to kickstart the process of outlining the next licensing steps for the WOAN.

Dr Modimoeng cautioned that there should not be any apprehension that ICASA was abandoning the WOAN, as it was still embarking on this process, which had to be an informed one. ICASA had to ensure that several international economic considerations, which included the impact of the Covid-19 pandemic on market structures and on telecommunications’ sectoral configurations, was considered in the licensing of the WOAN. The impact of the pandemic on changing markets and the consolidation from four-player to two-player markets in some instances had been considered, as ICASA believed in making informed decisions.

Monitoring of municipal elections

ICASA was empowered, in line with section 57 of the Electronic Communications Act (ECA), to allocate Party Election Broadcast Slots (PEBS). Once it allocated PEBS to political parties and independent candidates participating in local government elections, ICASA would then monitor if those PEBS were adhered to in the appropriate manner. While it had embarked on this exercise, this election was very strenuous due to the truncated basis under which it was conducted. It had worked overnight and managed to allocate PEBS to political parties, as well as to independent candidates for the first time ever. Currently, the ECA does not recognise independent candidates. However, a Constitutional Court judgment in 2020 ruled that going forward, independents should be accommodated, even for national elections, and that Parliament should embark on a process. ICASA was legally advised to cater for independent candidates in the allocation of PEBS, which it had successfully achieved and would improve on going forward.

As part of this election process, a conflict complaints assessment was established ,whereby members of the public or political parties could contact ICASA if it felt that something untoward was done by any broadcaster. ICASA did not refer any complaint to its Complaints and Compliance Committee (CCC) as it had not received any complaints during this election. Three complaints were received:

  • on the incorrect name of the political party President of the Pan-African Congress (PAC);
  • on a political formation that supported the interests of physically disabled people in the country; and
  • on the SABC, about attributing the incorrect name to the PAC President.

All of these complaints had been addressed through correspondence between ICASA, the SABC, and the relevant complainants. After an assessment of this, the outcome was that ICASA did not need to refer any matter to the CCC.

ICASA was in the process of compiling a final Elections Monitoring Report, which would be submitted and presented in conjunction with the Independent Electoral Commission (IEC), as they had worked closely together.

Another complaint was received from Bay FM about the Democratic Alliance’s (DA) political adverts being played without a top and bottom disclaimer. When a political advert starts, there should be a voice that indicates that the advert was not the views of the television or radio station involved, and that it was the views of the political party. ICASA was still looking into this matter, as it may have been an omission. However, no CCC referrals were made, and no complaints were lodged with ICASA on the SABC’s editorial policy or anything to that effect.

Dr Modimoeng concluded the presentation and handed back to the Chairperson.

BBI on addressing areas of under-performance

Mr Loyiso Tyira, BBI Board Member, said he represented the Chairperson of the BBI, who was unable to attend this meeting. The presentation would be led by Mr Andrew Matseke, the Chief Executive Officer (CEO), and supported by Mr Ian van Niekerk, the Chief Financial Officer (CFO).

He said the BBI took the presentation as read by the Members, and noted that the DM had already covered the key issues in his opening remarks.

Financial performance

The main issue around the historical underperformance of the BBI was linked to the ability to access funding to invest in the network and to grow the business. The BBI did not focus only on working on the shareholder loan conversion into equity, but was also working on a turnaround plan that covered sales activities; the issue of not having an Electronic Communications Services (ECS) licence; increasing capacity on the network; and several internal processes that would enable it to operate efficiently.

The BBI must grow revenue to become financially sustainable by investing in upgrading and expanding its network. While this was undertaken, the BBI was focused on building a sales pipeline. It met its target of assigning new sales contracts in the 2018/2019 financial year, but there had been some changes in the market since then. Since BBI was unable to invest in its network, this meant that it had regressed from the 2018/19 financial year.

BBI had experienced growth in the small to medium Internet Service Providers (ISPs), as many of these had become aware of BBI’s capabilities through its involvement with the SA Connect Project. The small, medium and micro enterprises' (SMMEs') ISPs currently represented between 70-80% of BBI’s customer base.

It was also working on the process of capacitating the sales environment in people headcount. A recent report produced by local research firm BMIT indicated an appetite in the market for the high-capacity connectivity that the BBI offered. The BBI therefore took the approach that since there was a market for it, as confirmed by the opportunities that its sales team had worked on, this required it to make its network more scalable to match the current demand. It had identified just over R1bn in critical investment required for the next four years, and if those investments were made, BBI could start growing its revenue from its current levels, which represented 10% of the wholesale market. The plan was to at least double this percentage to have a minimum of 20% market share in the wholesale connectivity market. In doing this, BBI could start increasing the revenue of the company, which would enable it to move towards financial sustainability.

Funding plan

From a funding perspective, it considered hybrid project financing, including borrowings that were guaranteed from the balance sheet. The DM had indicated that the BBI was taking this proposal through board approval, and it planned to take it to the shareholders by 10 December.

On the activities for funding, BBI had engaged commercial banks and it would resume again once the board and the shareholders gave the go-ahead.

It also considered funding from vendors. Instead of spending upfront capital, it would instead have a deployment of networks funded by the vendors, where the BBI pays for the asset over a period of time and takes ownership later.

BBI was engaging with developmental financial institutions (DFIs) such as the Development Bank of Southern Africa (DBSA) and the Industrial Development Corporation of South Africa (IDC). It had considered funding from private equity players in the past, but with the shareholder loans converted and the balance sheet stronger, the case was better for DFIs and commercial banks.

Information and cybersecurity

Several interventions had taken place since the AGSA’s audit findings. One of these was that the BBI’s board had established a technology sub-committee to assist management in mitigating these risks, and BBI had appointed a cybersecurity specialist in September/October 2020 on a fixed-term contract. It had successfully closed 88% of the audit findings thus far, and was working towards completing 100% before the end of the current financial year.

Since the specialist was appointed, policies had been reviewed, including the development of new policies that would go through the technology sub-committee for approval.

A cybersecurity insurance cover had been implemented, including interventions that made working from home from a cybersecurity perspective similar to working from the office in the packages that were used, such as Mimecast.

BBI had updated its policies to be compliant with the Protection of Personal Information Act (POPIA).

Merger with Sentech

The Minister had considered the timelines for the completion of this process, including the original approach which would have required both the BBI and the Sentech Acts to be replaced by a new law that would take time.

The Minister had considered the approach of the BBI acquiring Sentech, which was informed by the strength of the BBI’s mandate in its Act. If this approach was successful, it would reduce the process of the merger by eliminating the need to draft a new piece of legislation. BBI was currently working on this approach with the Department and the boards of BBI and Sentech, and the intention from the Ministries was to complete this process before the end of the current financial year.

Going concern

Mr Van Niekerk explained that the going concern issue was a combination of all the items presented by Mr Matseke, to what the AGSA viewed as a going concern for the BBI to continue entering and doing business in the normal course of daily operations.

The conversion of the shareholder loans to equity had significantly improved BBI’s balance sheet, but it was still required to improve its operations to ensure that it moved away from this going concern, that continued to be raised.

Obtaining access to funding and expanding its network would provide BBI an opportunity to leverage this to improve its sales and revenue, which would drive its profitability. This would put it in good stead to deliver a compelling argument to the auditors, indicating that the going concern was the only item that added to the fact that it did not have a clean audit report. With this done, BBI had the opportunity to move away from this going concern.

Mr Matseke indicated that the presentation was concluded and handed back to the Chairperson.

Discussion

Mr V Pambo (EFF) asked Dr Modimoeng to speak more on the auctioning of the spectrum, because he seemed very excited about it. In his view, he did not necessarily believe that auctions were fair and equitable, as Dr Modimoeng claimed, because it favoured those with money while the other players would not have the same enjoyment as those who belonged to the duopoly in the market. Could Dr Modimoeng explain why he believed that auctions were the best, in view of the other players who ordinarily would not be able to compete with the bigger players?

The Chairperson thanked Mr Pambo for the question. He noted Mr Z Mbhele (DA) was covered and handed over to Dr Modimoeng to respond to Mr Pambo’s question.

ICASA’s Responses

Dr Modimoeng explained that in South Africa, ICASA took a dual approach. The auction was earmarked around incumbents, which did not refer only to the six infrastructure players such as Cell C; Telkom; Vodacom; Rain; Liquid Telecommunications; and MTN. The incumbents he referred to included all the licensed operators. Through the licence conversion process of the early 2000s, South Africa currently had over 300 network licensees.   

The Chairperson interjected as Dr Modimoeng’s sound was inaudible.

Dr Modimoeng requested five minutes to resolve his technical issues.

Follow-up questions

The Chairperson opened for questions while Dr Modimoeng resolved his network issues.

Mr T Gumbu (ANC) said he was covered.

The Chairperson noted Mr Gumbu’s response.

He extended his appreciation for the presentations, particularly Dr Modimoeng’s point that ICASA had to ensure that public interest was protected at all times, and to do this in a manner that enabled the economy to function through a contribution by industry. It was important to keep this balance, as the Committee’s view since the litigation on the temporary spectrum was that all parties should establish lasting solutions which would assist the country to move forward, especially on the commitments made. ICASA should therefore note that it was still supported on this.

He raised the issue of the WOAN, and the period when the activities would be assessed elsewhere. Given that this was already a matter that had been considered and timelines established, was this simply about checking what happened elsewhere, or were the concerns and different views that had been expressed on WOAN in its current form considered as a transformational tool? The Chairperson noted that the BBI could also respond to his question, since he had an issue with the loans. However, he was satisfied that it had been finalised as equities which had changed the balance sheet to enable it to enter the market.

BBI’s presentation indicated that while the conversion into equities was positive, this did not really eliminate its experience of cash flow issues, especially since it intended to expand the infrastructure. In view of the merger, this was also intended to improve the situation, and the BBI had since taken the route of acquisition. How would this address the going concern issue, as mentioned in the presentation? He asked the BBI to provide some projections on the collaboration in this merger, and if it would result in a positive outcome of a functional entity. He commented that the merger was not simply about reducing the number of entities, as it should result in the functionality of these entities, especially in view of the timelines.   

The Chairperson invited Dr Modimoeng to respond to the questions.

ICASA’s response

Dr Modimoeng apologised for the delay. He joked that this highlighted the need for spectrum licences.

On the spectrum auction, the common understanding was that South Africa had only six infrastructure players, but this was inaccurate. Through the conversion of what was known as the Value-Added Network Service (VANS) licences during the period of the formulation of the Electronic Communications Act (ECA) in the early 2000s, those VANS licences had been converted into what was now known as network service licences issued by ICASA. He confirmed there were over 300 licence holders.

In instances with the high demand spectrum which an incumbent intended to license, that incumbent must decide between different telecom players. It therefore becomes very difficult for ICASA to license this kind of spectrum to incumbents. ICASA regulated a capital-intensive market, which required licensees to be able to launch services. There would be no issue if a licensee of those 300 licence holders could raise capital to participate in a transparent auction process, because ICASA availed the spectrum; a transparent public auction was held; and everyone was given an opportunity to apply and to bid for the spectrum that was needed for their particular services. Dr Modimoeng emphasised that within the South African context, “incumbents” within the auction process did not refer only to the six players mentioned above, as anyone who currently held a licence in South Africa could participate in this process.

The purpose of the WOAN was for anyone who did not have a licence. This meant that consortiums of several sections of society, according to how the ITA would be framed, could collaborate and submit a competitive and formidable application. As part of being licensed for the WOAN, those consortiums would then be given a network service licence to be able to operate the WOAN.

In view of the previous ITA, before ICASA was taken to court, ICASA had implemented important safeguards, such as a compulsory 30% capacity of uptake, whereby industry players would be obliged by law to get about 30% capacity from the WOAN to ensure that it did not become a white elephant. The WOAN was an instrument of transformation, and this was the reason why ICASA had cautioned not to simply license it as a mere exercise of licensing. Instead, it had undertaken this licensing to ensure that the WOAN would succeed. Dr Modimoeng clarified that the successful bidder, after adjudication and all the processes, would be awarded the licence and would then be a successful market player.

On the question of the WOAN and the studies it undertook, ICASA would be interacting with various countries such as Mexico, for instance, which had been known to be a proponent of the WOAN. However, the WOAN had recently failed in Mexico. ICASA’s intention was not to replicate the Mexican model, but as a responsible regulator, it would engage with Mexico and other countries, to understand its challenges and what it could have done in hindsight to be successful. It would apply this to the South African context to ensure that ICASA implemented a robust WOAN that could endure challenges. It believed in measuring its claws 99 times and cutting only once, as opposed to doing the opposite, which was wastage. This was the approach ICASA was embarking on with the WOAN licensing process.

Dr Modimoeng concluded his responses and handed back to the Chairperson.

BBI's responses     

Mr Matseke, responding to the Chairperson’s question, agreed that the conversion of the shareholder loans into equity only strengthened the BBI’s balance sheet, but this process did not make any cash available. The BBI was still required to follow a process of raising capital from the markets to invest in the network. The shareholder conversion was therefore the first step in the process described in the presentation.

On the issue of the merger, the current approach was that the BBI needed to address its going concern status as a separate entity. He clarified that Sentech was not being used to subsidise the BBI, as its going concern status was not part of the merger with Sentech and was therefore being addressed as a separate item.

The strategy of the merged entity was still a work in progress which would be presented for the shareholder’s approval before the end of the current financial year. A business case had been undertaken by the Department, with the assistance of the Government Technical Advisory Centre (GTAC) at National Treasury. However, this process was driven by the shareholder, and not by the two entities. BBI and Sentech were working on a combined strategy, as well as the outlook as to how this combined entity would look going forward. This would be completed as a deliverable before the end of the current financial year.

The Chairperson thanked Mr Matseke for his responses, as they assisted the Committee in undertaking its oversight role in monitoring the process of this merger. He handed over to the DM to add inputs on the responses.

Deputy Minister’s inputs

DM Mapulane said Dr Modimoeng and Mr Matseke had covered the questions comprehensively.

The method of licensing that would be adopted by ICASA should be fair and competitive. ICASA had chosen the auction route, as it maintained that this was the best method to achieve competitiveness and to ensure that everyone could participate in acquiring the spectrum. On the point raised about the financial powers of the other players, the model that ICASA had implemented should be able to accommodate this through the WOAN. He noted that Dr Modimoeng had already spoken to this.

On the method of the merger, the Minister believed that the quickest way to do this was to have one entity acquiring another. In view of the enabling legislation of the two entities, the BBI legislation would facilitate what was currently performed by Sentech, as this enabling legislation was quite broad and expansive. This was the rationale for the view that the BBI should acquire Sentech to facilitate a speedy process. However, this model was not presented as the best, since it could have its own challenges that were currently being addressed by the Department by learning from other experiences, such as in the Department of Mineral Resources and Energy, where a similar process had been concluded.

DM Mapulane said he was satisfied with the responses that had been provided, and handed back to the Chairperson.

The Chairperson thanked the DM for his closing remarks.

Closing remarks

The Chairperson commented that Members’ concerns had been covered, since the Committee had been dealing with the issue of spectrum and the BBI’s going concern for some time. He was satisfied that these matters had progressed.

He informed the DM that the reason why the Committee had sought to monitor this was because it was committed to ensure that those issues were not part of the statistics, where the Committee was unable to deliver on them. It intended to ensure that the mandate of the sixth administration was delivered while it was still afforded the opportunity to do oversight on those that should deliver. He assured the DM that the Committee would continue monitoring, especially the timelines, to ensure the realisation of these processes. This was also the reason why the Committee called the Department occasionally to provide assurances that those timelines could be met. It was good news that there was still a sense of a balanced approach in what was being done, and an opportunity to relook at some of the necessary issues, to resolve them, and enable their delivery within a particular timeframe.

The Chairperson said the Committee would maintain its support for delivery that should impact positively on bettering the lives of South Africans through these entities.

The meeting was adjourned.

 

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