MINISTRY OF COMMUNICATIONS
WORK PROGRAMME FOR THE YEAR 2000 /2001
PRESENTED BY COMMUNICATIONS MINISTER DR IVY MATSEPE-CASABURRI
9 FEBRUARY 2000

A number of initiatives to be implemented by the Ministry of Communications during the next financial year (2000/2001) will result in billions of rands of investment into the economy_, and could see the creation of thousands of new jobs in the information communication technology (ICT) sector.

INITIAL PUBLIC OFFERING FOR TELKOM
Preparatory work for the Initial Public Offering (IPO) of Telkom is underway. Global co-ordinator(s) / advisor(s) - including an investment bank, lawyers and a technical advisor - are to be appointed through a competitive bidding process. The appointment of a global- co-ordinator(s) I advisor(s) will be finalised by the first half of this year.

BACKGROUND TO THE IPO FOR TELKOM: The listing of a portion of Telkom equity is an important government priority. This will realise the injection of commercial/ market discipline into the management and operations to ensure global competitiveness. The listing will strive towards the transformation of a former government department into a global telecommunications company in a competitive landscape. The IPO will ensure the transformation of the economy and a key national asset.

To-date there is every indication that the sale of 30% of Government equity in Telkom to the strategic equity partner; Thintana Communications, in 1997 has been successful. The sale has improved shareholder value, met the stringent licence targets, advanced the training programme and transformed the company to meet the goals of the democratic Government Indicative valuations of Telkom are that the company has increased significantly in value since the partial privatisation in May 1997. An IPO for Telkom will contribute significantly to the macroeconomic strategy of the country, inject significant market discipline into the company and will have positive effects for the economy. Public offerings for national telecommunications are gaining momentum worldwide.

The Department believes that it is important to note that Telkom does enjoy a radically different investment profile. With effective marketing at the time of the Telkom IPO, Telkom will get a premium value by being compared to the best of the Eastern European, Latin American and Asian telecom operators, making it a more attractive opportunity for investors and maximising value for the Government as shareholder. The IPO is certain to consolidate democracy and build capacity in the spirit of the African Renaissance.

SPECTRUM PRICING POLICY AND LICENSING
The Ministry of Communications intends to complete the formulation of a policy on Spectrum Pricing by the first half of this year and for SATRA to license the use of radio frequency spectrum by year end.

BACKGROUND TO SPECTRUM PRICING AND LICENSING: South Africa is undergoing a process of considerable change in its telecommunications sector through a process of liberalization, which will hopefully result in significant improvements in the quality and price of telecommunication services offered to the public. With the emphasis placed on wireless local loop and satellite technologies, it will place additional pressure on the radio frequency Spectrum capacity and availability and it will therefore, in a technical sense, require the most economical and efficient use thereof. Economic value of spectrum is being ascertained. The radio frequency Spectrum is a scarce national resource, the economic value of which must be used for equitable efficient and effective objective

The Government has built significant technical capacity in the field of radio frequency spectrum. This is useful in the development of a common SADC position on co-ordinating the frequency bands and to maximise value. Currently several implementations of Low Earth Orbit Satellite systems, are competing for access to different bands of the frequency spectrum in order to offer global telecommunication services.

E-COMMERCE POLICY FOR SOUTH AFRICA
The Green Paper on E-Commerce will be published in the first half of this year, and the White Paper on E-Commerce will be published in the second half of this year. Legislation flowing from White Paper will be tabled in parliament in the first half of 2001. E-commerce is a multi-disciplinary project, which involves a number of government departments.

BACKGROUND TO E-COMMERCE POLICY PROCESS: The Department of Communications has been mandated to develop a policy framework on electronic commerce. This happens at a time when e-commerce is at the top of the agenda for most progressive nations in the world. The South African government is committed to creating an enabling environment for e-commerce to take place and to maximising potential socio-economic benefits of e-commerce and thus improving the quality of life for our people. The policy process entails the preparation of a Green Paper, a White Paper and supporting legislation. As a starting point for national discussions, a discussion paper was prepared in collaboration with other departments. The Minister of Communications has since launched a discussion document on e-commerce in July 1999 (available at http://www.ecomm-debate.co.za). Dedicated working committees representing a relatively broad spectrum of the stakeholders in e-commerce have been developing inputs to the second phase of our endeavor, which is the Green Paper. The inputs were developed to cover issues around Security & Privacy; Customs & Taxation; Intellectual Property; Infrastructure, Access & Convergence; Electronic Payment Systems: Internet Governance & Domain Naming; Education Awareness & Enablement; Technical Standards and finally Legal and Contractual issues.

KHOI-SAN RADIO STATION TO BE LAUNCHED
In the President's 25 June, State of the Nation address last year, he emphasised the need to restore the pride and identity of all our people, especially marginalised groups such as the Khoi and the San. To this end the Ministry will soon launch a radio station to serve the Khoi and San communities. The test broadcast has been successfully completed during the live transmission of the President's State of the Nation Address on Friday 4 February 2000. The application for a broadcast licence is already with the IBA.

RESTRUCTURING OF SENTECH

The Ministry of Communications intends to obtain strategic equity partners for the signal distributor Sentech. The process of securing advisors for the SEP process of Sentech is already underway.

BACKGROUND TO THE STRATEGIC EQUITY PARTNER OF SENTECH: The project to restructure Sentech and expand its service, is aimed at injecting capital advanced technology and expertise into Sentech. This will result in a more competitive entity offering more services and competition in an evolving multimedia environment. A restructured Sentech will provide better access, contribute toward economic empowerment and create opportunities for ownership and control by previously disadvantaged groups. It will allow the signal distributor to offer basic broadcasting services such as tele-medicine, tele-health and multimedia to all areas of the country. The project includes the expansion of the signal distribution network to two provinces’

· Northern Province - where additional transmitters for Ligwalagwala FM and Ikwekwezi FM are to be installed. An estimated 150000 thousand new rural households will be reached by these two stations; and

· Kwazulu-/Vatal - where additional radio and television transmitters for Ukhozi FM and eight television transmitters for SABC 3 are to be installed. This will extend the coverage of the two services to reach more than a milllon people who did not receive them in the past.

RESTRUCTURING OF THE SABC AND CORPORATISATION OF CHANNEL AFRICA

Following a Cabinet decision that Channel Africa, the Africa-radio service arm of the SABC, be financially independent, the Ministry of Communications intends to corporatise Channel Africa by the end of this year.

BACKGROUND TO THE RESTRUCTURING OF THE SABC AND CORPORATISATIQN OF CHANNEL AFRICA: The restructuring of the SABC aims to release latent value trapped in the national broadcaster through the re-organisation of the corporate structure into Public and Commercial entities. The Public Broadcasting Service will focus on delivering a public service. The Commercial Service aims to attract investment in order to draw skills; technology and resources to enable SABC to be competitive. The corporatisation of Channel Africa into a relevant and profitable independent company is another aim of the overall project. It seeks to align Channel Africa to the concept of African Renaissance and objectives of South African foreign policy. It is intended that Channel Africa support the establishment of an African think-thank; drawing on a pool of African experts in the communications sector.


STRATEGIC EOUITY PARTNER FOR POST BANK

The Ministry of Communications intends to seek a Strategic Equity Partner (SEP) for the Post Bank in a second phase of restructuring. This will follow the corporatisation of the Post Bank to be completed by the end of this year. The Department of Communications is currently finalising the awarding of a tender for consultants to assist in the corporatisation of the Post Bank.


BACKGROUND TO THE SEP FOR THE POST BANK: The Corporatisation and acquisition of a SEP will enhance the potential of the bank to bring about competitiveness in the financial Sector; specifically in the unbanked, lower income group. The project will contribute to economic growth and job creation in that a new corporatised entity will produce new products and services concentrating on new markets and services. The Post Bank will invest in new technology and processing Software and hence contributes to in vestment. The project seeks to boost economic growth and reduce poverty by:
· mobilising savings and investment funds from the broad sector of the community,

· providing the entire range ofbanking and financial services to the low income earners, small farmers, especially the rural poor who are excluded by conventional commercial banks;

· supporting public investment capital for national policies; and

· enlarging the base for national savings thus pursuing the stability and growth of the national economy.

The appointment of a SEP should be completed by the first quarter of 2002.

POST OFFICE TO BREAK EVEN ONE YEAR AHEAD OF TARGET

The subsidy paid by Government to the SA Post Office will end by the end of the financial year, one year ahead of the three-year target laid out in the Postal White Paper. This is as a result of efficiency gains and performance improvements experienced by the company for the last two financial years. The new five-year business plan of the SA Post office will reflect an immediate break-even and improvement in its bottom line.

Background to SA Post Office Subsidy: The SA Post Office has in the past been funded through a grant from Government. In the past few years, this reached a high of R700 million. Following the restructuring of the SA Post Office and the employment of a Strategic Management Partner (New Zealand Post International and Royal Mail International) in October last year; a turn-around strategy has paid dividends. The final grant from Government was paid in this financial year (1999/2000) amounting to R283 million. The new three-year business plan will be accompanied by the issuing of a 25-year operating licence that will give the SA Post Office an exclusivity to operate certain postal services. The licence will be issued in the coming financial year by the newly-established Postal Regulator.


MULTI-PURPOSE COMMUNITY CENTRES / CITIZENS POST OFFICES BEING ROLLED OUT

A combined project team (Department of Communications and the SA Post Office) is in the process of rolling electronic/ digital communications services in selected post offices through the concept of "Citizens Post Office".

BACKGROUND TO THE ROLL OUT OF MULTI-PURPOSE COMMUNITY CENTRES / CITIZENS POST OFFICES: The project entails the deployment of electronic/digital communications services and other essential communication services in selected postal offices across the country. National priority areas for the integrated Rural Development Strategy (IRDS) namely, Eastern Cape Province (King William's Town, Flagstaff, Mt Frere, Sterkspruit, Idutywa, Butterworth, Mdantsane, Umtata, Bizana and Peddie), KwaZulu/Natal (Nongoma, Ulundi, Estcourt and Edendale) and Northern Province (Thohoyandou, Dzanani and Elim) will be given high priority. Other areas are. North West (Mmabatho), Northern Cape (Smithdrift), and Western Cape (George, Worcester and Langa). The idea is to ensure the provision of national communication infrastructure particularly in those areas and communities historically disadvantaged by the apartheid policies of the former regime. Multi-purpose Community Centres / Citizen is Post Offices provide a critical platform through which access to communication services and training can be extended to marginalised communities to ensure that those communities are not permanently excluded from the "information age "and its potential benefits.

MULTI MILLION RAND CONTRACT TO ROLL OUT PIT KIOSKS

The Minister of Communications will announce the preferred bidder for the supply of Public Information Terminals (PIT) (kiosk and software) once the Post Office and the Department of Communications finalise the tender that closed late last year.
BACKGROUND ON THE PIT PROJECT: Public Information Terminals (PIT) are to become the national standard for the effective electronic dissemination and distribution of government information and forms as part of Government's social commitment to the public.
It is envisaged that e-commerce applications will become the main source of revenue of the SA Post Office within five years. PIT will provide the infrastructure necessary for the introduction of e-commerce applications. PIT will be installed in post offices around the country, creating a platform for the Post Office to pilot electronic-business services on PIT with the objectives of investigating:
· fulfillment of universal service obligations through self-service kiosk technologies;

· electronic banking services as a cost-effective and efficient alternative to conventional Post Office Banking; and

· potental for generating additional revenue through provision of access to informational services, educational services, internet advertising and business-to-consumer electronic commerce services.

HUMAN RESOURCE DEVELOPMENT
The Department of Communications is committed to improving the level of skills in all its sectors. It already has a number of established training programmes in place. This year will see the establishment of a Postal Training Institute as part of a strategy to build capacity in the postal services sector. This project is envisaged to be a tri-partite arrangement between the department, the post office and an international partner

The learning centre at Houwteq providing a postgraduate training programme specialising in software, networking, and satellite engineering was established as a pilot project two years ago. This Institute for Space Applications is targeted at historically disadvantaged students who have displayed a science, engineering and technology (SET) potential through having obtained BSc degrees, mostly at universities not offering engineering degrees, with an emphasis on women, rural applicants and the underemployed. On completion, the graduates have been much sought after within the telecommunications sector although students are encouraged to continue with further studies. In the first year, there were 36 participating students. This year (2000/2001) as the project moved from a pilot into an established project, there were around 100 participating students.

This month the Minister launched the LLM in Communications Law at the University of the Witwatersrand. This programme is aimed at addressing the shortage of skills in the communications law in the country, especially students from disadvantaged communities.

THE AFRICAN CONNECTION TRUST
A Trust has been established to oversee the administration of the African Connection Project and the process 6f recruiting a full time secretariat is also underway.

RESTRUCTURING OF PATU AND THE LAUNCH OF AFRICAN TELECOMMUNICATIONS UNION
The restructuring of the Pan African Telecommunications Union has been successfully completed through the launch of the African Telecommunications Union in Cape Town in December 1999. This has firmly aligned ATU with international developments allowing private sector operators to become associate members, reflecting changes in the sector where Government is no longer the only player in the provision of telecommunications infrastructure and services.

LEGISLATIVE PROGRAMME FOR 2000/ 2001

There are a number of laws that will have to be presented to Parliament to facilitate the initiatives mentioned above.

The IBA/SATRA Merger Bill deals with the merging of the two independent institutions.

The Telecommunications Amendment Bill will essentially allow for the licensing of an additional national fixed-line operator and deal with convergence issues.

We will also be presenting a bill defining the telecommunications post-exclusivity period that will broadly promote competition in telecommunication services.

The Post Bank Bill will create the legal environment necessary for the restructuring process, and the Postal Amendment Bill will deal with necessary amendments to the Post Office Act of 1958.

Other legislation to be introduced in this year are the Broadcasting Amendment Bill, the Convergence/ Multimedia Bill, amendments to the National Emergency Telephone Services Act and legislation for ecommerce.


STATEMENT BY
COMMUNICATIONS MINISTER DR IVY MATSEPE-CASABURRI
ON THE AUDITOR GENERAL'S INVESTIGATION INTO SATRA AND THE
THIRD MOBILE CELLULAR LICENSING PROCESS

Since the request made by Parliament that the Auditor General investigate the SA Telecommunications Regulatory Authority (SATRA), I have received several briefings from the Auditor General that were specific to the allegations concerning the third cellular licence process.

Yesterday, I received the third briefing from the Auditor General on the basis of which I have come to the conclusion that the licensing of the third cellular operator must proceed.

Therefore_, the licensing process will now proceed to its natural conclusion. SATRA will be informing the applicants of the name of the preferred applicant for the third cellular licence by the end of February, 2000.

After the applicants have had the opportunity to make representation to SATRA on the preferred applicant, SATRA will make its final recommendation to me by the end of March, 2000.

It is most unfortunate that we had to delay the licensing process in order to deal with these allegations. But it was necessary to ensure that the bidding process rigorously followed the statutory requirements and to restore the integrity of the process.

As government, we are committed to transparency and good governance in all our work and particularly in important transactions such as the licensing of a third cellular operator. We are committed to creating a vibrant environment for competitive cellular telephony in the country.