Presentation to Portfolio Committee on Telecommunications & Postal Services Chairperson, Honourable Ms. M Kubayi, MP USAASA & USAF 2014/15 Annual Reports USAASA & USAF delegation led by Mrs. Pumla Radebe CD (SA) Chairperson USAASA & USAF Public Entities 15 October 2015 “Universal Access and Service to ICT for All”

Table of Contents  USAASA Annual Performance Overview Incl. DTT / Excl. DTT  USAASA Annual Performance Overview  USAASA Pre-Determined Objectives - Non Achievement  USAASA 2014/15 Human Resource Oversight Statistics  USAASA Annual Financial Performance  USAASA Audit Findings Summary  USAF Annual Performance Overview Incl. DTT/excl. DTT  Synopsis of USAF Annual Performance against the Pre-Determined Objectives  USAF Pre-Determined Objectives - Non Achievement  Synopsis of Performance for USAF Projects from Present  USAF Annual Financial Performance  USAF Audit Findings Summary

USAASA Annual Performance Overview Incl. DTT / Excl. DTT Synopsis of USAASA Annual Performance Incl. DTT Unit Planned targets Achieved targets Partially achieved targets Not achieved % Achievement Governance % PM&E % Int. Audit % Risk Mgmt % Stakeholder Engagement431075% Finance541080% IT % HR633050% Admin % Legal211050% Total Planned % Synopsis of USAASA Annual Performance Excl. DTT UnitPlanned targets Achieved targets Partially achieved targets Not achieved % Achievement Governance % PM&E % Int. Audit % Risk Mgmt % Stakeholder Engagement % Finance % IT % HR633050% Admin % Legal211050% Total Planned %

USAASA Annual Performance Overview Achieved : 79%Non Achievement : 21% Governance : Minimum 4 Board and committee meetings conducted & Minimum 12 EXCO meetings conducted. Performance Monitoring: USAASA & USAF Strat Plans and APPs developed, approved and submitted to DTPS and Parliament. Approved quarterly reports submitted to DTPS within the regulated time. USAASA and USAF annual reports developed and tabled at Parliament. Internal Audit: 21 audits conducted as per the approved APP in order to strengthen the Agency’s internal controls. Risk Management : Top 10 risks identified and monitored Stakeholder Engagement : Stakeholder perception improved by 80% from a baseline of 38%. 60% stakeholder support of the ICT National Strategy & USAF projects awareness campaigns conducted. Finance : Produce accurate financial statements, 100% match between the physical assets and the assets register, 100% compliance with the laws and regulations pertaining to treasury, supply chain and the statutory regulations & 80% of USAASA and USAF procurement from BBBEE. Information Technology : 90% compliance to IT governance, 95% Availability of business systems, Maximum 10% security breach incidents reported. Human Resources : Ensure that employees’ grievances and disciplinary cases handled are less than 5% of our staff complement. Timeous submission of performance agreements & performance assessments by business units. Introduction of leadership training for management. Administration : 90% compliance with Occupational Health, Safety and Environmental Act. Legal : Appointment of legal representative to act on behalf of the Agency during litigations associated with the Agency Stakeholder Engagement : 60% support and awareness of Fund Manual by the targeted stakeholders. USAASA is engaging National Treasury & ICASA to revise percentage contribution to USAF to 1%. Finance : 95 % of the actual expenditure spend in line with the allocated budget. Placement of orders in the beginning of Q2 to set-top-boxes and related antennas will trigger the expenditure of USAF subsidies. Human Resources: Training of managers and implementation of employee wellness programme are incorporated into the organisation development and the OD process will be completed once all the personnel has been moved into the new structure at the close of Q3. Legal: Reduce risks associated with litigations against the Agency by 5%. This target is part of the monthly operational risks plan and it would be continuously monitored in order to bring down the costs below 5%. 2014/2015 PLANNED TARGETS PROGRESS to Date

USAASA Non - Achievement : Pre-Determined Objectives KPIANNUAL TARGETPROGRESSMITIGATION FOR NON-PERFORMANCE Percentage support and awareness of Fund Manual 60% support and awareness of Fund Manual by targeted stakeholders. The Board of USAASA approved the standard operational guidelines for USAF in 2014 as part of the National Strategy for Universal Service and Access. The Minister will be engaged on the legislative requirement. The Electronic Communications Amendment Act, 2014 enjoins the Agency to develop and review standard operational guidelines for the Universal Service Fund (USAF) and the purpose the funds are going to be used for every two years. The Agency is currently engaging ICASA & National Treasury on the revised percentage levy of 1% towards Universal Service and Fund with a view of securing funding for the implementation of the Fund Manual. Percentage of actual expenditure spent in line with the allocation budget 95% of the actual expenditure spend in line with the allocated budget. The majority of the USAF budget relates to DTT. Only 1,2% of the DTT subsidy (i.e. R9,7m of the R791m DTT budget) was spent in 2014/15 due to delays in Policy resolution by the Department of Communications resulting in a huge shortfall on spending. This target will only be met once the subsidy / funding of set-top-boxes commences. The placement of orders by the beginning of 2015/16 Q2 will trigger the expenditure of USAF budget relating to DTT. Percentage reduction of risks associated with litigations against USAASA Reduce risks associated with litigations against the Agency by 5%. The Agency was able to reduce labour litigations below 5%. It was only the civil litigation pertaining to policies which are beyond the control of the Agency that led to a substantial increase in litigation. The indicator will form integral part of the monthly risk mitigation plans and it will be continuously monitored in order reduce the risks.

USAASA Non - Achievement : Pre-Determined Objectives KPIANNUAL TARGETPROGRESSMITIGATION FOR NON-PERFORMANCE Employee satisfaction 1 employee wellness programme activity conducted per quarter. Only one employee wellness programme was conducted in the 2014/15 financial year. USAASA has signed a 24 months contract with NBC holdings to render the EAP programme. The employee wellness programme has been prioritised in the new financial year to be conducted every quarter. Percentage implementation of approved organisational development plan 60% Implementation of approved organisational development plan. Competency Assessments were completed in Q2 of the 2015/16 financial year focusing on Operations Division as the Agency’s core division. Matching and Placement was also completed in Q2 of 2015/16. Consultations with all employees were done through presentations in each individual division. Costing of the operational structure was completed by consultants during Q2 of 2015/16 and it is in the process of being finalised by USAASA management. The current focus is on migration processes to the new structure as well as concluding competency assessments for other divisions. Percentage satisfaction of employment relations scoring 3 and above based on rating scale of 1 (poor)/3 (good)/5 (Excellent) 80% satisfactory employment relations based on the survey questionnaire conducted. The reported score is the overall aggregated satisfaction without considering the fact that some of the comments were not truly objective. E.g. comments like “I am not entirely satisfied because the IT systems are installed to monitor staff”. This is so that management consideration looked at all matters without categorisation. The annual target has been addressed as part of the organisational development process and also incorporated into the EAP programme.

USAASA 2014/15 Human Resource Oversight Statistics Staff Complement The organisation had a staff complement of 58 for the 2014/2015 financial year Vacancies  15 unfunded vacancies remained unfilled for the 2014/2015 financial year Terminations  The organisation had 7 terminations, 3 resignations, 1 expiry of the contract and 3 for other reasons  Staff turnover rate for 2014/2015 was 12% Employment Equity Status  The organisation had 25 males, 2 Top Management, 8 Senior Management, 12 Professional qualified and 3 skilled.  33 females, 1 Top Management, 3 Senior Management, 4 Professional qualified, 23 skilled and 2 unskilled

USAASA Annual Financial Performance STATEMENT OF FINANCIAL PERFORMANCE-USAASA 31 March 2015 Variances / Comments ActualBudgetVariance R‘000 Revenue Transfers from Government Other income 175-(175) Refunds, deposits & tender levies Investment revenue 730-(730) Interest received from investments. Total Revenue (905) Employee Related Costs (40 035)(39 692)(343) The minor variance on the salaries budget was due to a reduction in baselines however, this was compensated by under expenditure on other line items. Operating & Admin expenses (25 156)(25 684)528 The Agency implemented strict monitoring controls and resulted in savings in the year under review. Total Expenses (65 191)(65 376)185 Surplus (deficit) for the period Attributable to: Due to investment/ interest income and other revenue received

USAASA Audit Findings Summary 2011/122012/132013/142014/15 # of audit findings Audit ReportUnqualified SCM matters15950 Description2013/142014/15 Leadership2 Good 2 Concerning 2 Intervention required 5 Good 1 Concerning Financial and performance management 2 Good 1 Concerning 2 Intervention required 3 Good 2 Concerning Governance1 Good 1 Concerning 1 Intervention required 3 Good Status of Driver Controls-USAASA Key audit findings - Financial Adjustments to the AFS - Key management personnel - Receivables - Revenue Key audit findings – laws & Regulation No explanation for deviations Consistency between APP & APR Audit opinion Unqualified with findings on compliance

USAF Annual Performance Overview Incl. DTT & Excl. DTT Synopsis of USAF Annual Performance ProjectsTotal number of planned targets Achieved targets Partially achieved targets Targets not achieved % achievem ent Broadband10100% Schools connectivity % PWD % BDM10010% Total Planned % Synopsis of USAF Annual Performance UnitTotal number of planned targets Achieved targets Partially achieved targets Targets not Achieved % achievem ent Broadband10100% Schools connectivity % PWD % Total Planned %

Integrated Broadband Projects Broadband  Of the 2 designated broadband sites, Ratlou Local Municipality was installed in full while Joe Morolong Local Municipality installed in part.  Additional 63 connections effected on the new rolled network: 8 schools & 18 clinics in Ratlou (North West) & 10 schools and 27 clinics in Joe Morolong (Northen Cape) BDM  While there was no achievement on this target as no orders were placed or processed in the 2014 /15 financial year, considerable work was undertaken in preparation for the eventual implementation of the project Integrated Broadband Programme 2 broadband sites at Local Municipality 10 schools from the mainstream and 5 schools for Persons with Disabilities connected to ICT services Ratlou – North West Joe Morolong – Northern Cape Integrated Broadband Programme 2 broadband sites at Local Municipality 10 schools from the mainstream and 5 schools for Persons with Disabilities connected to ICT services Ratlou – North West Joe Morolong – Northern Cape Synopsis of USAF Annual Performance against the Pre-Determined Objectives BDM Digital Broadcasting Migration Finalisation of the Set Top Boxes and related accessories. Nationally starting with the borders Schools Connectivity  10 schools from the mainstream and 5 schools of the Persons With Disability at Ratlou and Joe Morolong were deployed. The following were deployed per site: Tablets – 40; Educator notebooks – 03; Printer – 01; Server – 01; Projector – 01; Interactive Smart – board – 01; Audio system – 01; Wi-Fi Wireless Access Point – 01 and; Internet speed is 2MB

USAF Non - Achievement : Pre-Determined Objectives KPIANNUAL TARGETPROGRESSMITIGATION FOR NON-PERFORMANCE Number of sustainable broadband networks with uptake and usage initiated from the list of 195 identified under- serviced local municipalities as per ICASA declaration of unserved and underserviced areas. 2 under-serviced local municipality broadband projects initiated and completed. The broadband site in Ratlou (North West Province) is fully functional and servicing all schools, clinics, government institutions and inhabitants whilst the Joe Morolong (Northern Cape) broadband network was not completed at the close of the financial year. All schools, clinics, government institutions and inhabitants are fully serviced by the network The Wi-Fi Networks deployed at Ratlou and Joe Morolong Local Municipalities are fully operational. The delay on finalising the Joe Morolong broadband network site was due to consequence of delays in Environmental Impact Analysis which is beyond the control of the Agency. The secondary backhaul facility which connects the entire local municipality is up and running however the primary backhaul facility which connects the both local municipalities ( Joe Morolong and Ratlou) which will ensure the fully network optimisation is partly completed and awaiting the finalisation of the building a public schools where the backhaul facility infrastructure will be installed. CSIR will commence with network audits and test in order to issue the Quality of Service Network Certificates. Percentage of 5.2 million needy households subsidised/funded for connection to digital broadcast. 40% of targeted 5,2 million households subsidised/funded for connection to digital broadcast. Orders were placed for both DTT and DTH set- top-boxes and Antennas at the beginning of the Q2 and this triggers the full implementation of the Digital Broadcasting Migration Programme The clearing of the legal challenge of the Digital Broadcasting Policy between the Ministry of Communications and e.tv paved the way for placement of orders for DTT and DTH set-top-boxes and Antennas to the appointment panel of service providers by the Board at the close of the 2014/2015 financial year. USAASA is collaborating with South African Bureau of Standards (SABS) in order to ensure the procurement of set-top-boxes meets the instruction note on 30% localisation of set-top-boxes procured through the Universal Service and Access Fund.

Integrated Broadband Projects Broadband  Of the 6 designated broadband sites,  Msinga - complete  Emalahleni (EC) - complete  Ratlou – complete (verification by CSIR due to commence)  Joe Morolong - complete (verification by CSIR due to commence)  Mutale - complete (verification by CSIR due to commence)  Albert Luthuli Local Municipalities installed in full while Joe Morolong Local Municipality installed in part network  120 access facilities connected to date comprising schools and clinics with dedicated links to enable service delivery  Emalahleni – 26 Clinics ; 3 schools  Msinga – 24 Clinics ; 4 schools  Ratlou – 18 Clinics ; 8 schools  Joe Morolong – 27 Clinics; 10 schools  Mutale – 17 Clinics Integrated Broadband Programme 5 of 6 completed broadband sites at Local Municipalities Over 120 schools from the mainstream and for Persons with Disabilities connected to ICT services Integrated Broadband Programme 5 of 6 completed broadband sites at Local Municipalities Over 120 schools from the mainstream and for Persons with Disabilities connected to ICT services Synopsis of Performance for USAF Projects from Present ConnectServiceSupportBuild

USAF Annual Financial Performance STATEMENT OF FINANCIAL PERFORMANCE-USAF 31 March March 2015 VarianceVariances / Comments Actual Budget Actual R’000 Revenue Transfers from Government Finance income Interest received: USAF investments Other income55- Refunds, recoveries and tender levies Total revenue Expenditure Project Expenses(72 301)( ) Variance is due to non-expenditure on BDM funds. These funds will be expended in the current year Audit Fees(702)(815)113 Administrative Expenses(3)(2)(1) Total Expenditure(73 006)( ) Variance due to unspent BDM funds. Surplus for the period Attributable to: Due to DTT subsidy and investment interest income received

USAF Audit Findings Summary 2011/122012/132013/142014/15 # of audit findings16888 Audit ReportUnqualifiedQualifiedCleanUnqualified SCM matters12400 Status of Driver Controls-USAF Description2013/142014/15 Leadership2 Good 2 Concerning 2 Intervention required 4 Good 2 Concerning Financial and performance management 2 Good 1 Concerning 2 Intervention required 3 Good 2 Concerning Governance1 Good 1 Concerning 1 Intervention required 3 Good Key audit findings - financial Misstatements in AFS - Receivables Key audit findings – predetermined objectives No explanation for deviations Consistency between APP & APR Key audit findings – laws and regulations Adjustments to the financial statements Audit opinion Unqualified with findings on compliance

Ke yaleboga Ke a leboha Ke a leboga Ngiyabonga Ndiyabulela Ngiyathokoza Ngiyabonga Inkomu Ndikhoulivhuh Dankie Thank you