Telkom is one of Africa's largest integrated communication service providers. We provide high quality services to all our custo
Section 1 Group overview Telkom is bringing the Next Generation telecommunication capabilities to South Africa and Africa
Telkom’s vision To be a leading customer and employee centred Information Communication and Technology (ICT) solutions service
Telkom group structure Vodacom Group – 50% Joint Venture Vodacom Group (Pty) Ltd is a leading mobile communications company pro
Financial review summary Steady growth of annuity revenue and data services while investing for future convergence Revenue grow
Operational review summary Consumer demand remains strong as Telkom continues to build-out networks, products and services • •
Telkom’s investment case Growing further into mobile and data (including media) services and expanding geographically • Increas
The Telkom footprint Telkom Group busine • Growing African assets – Africa Online and Multi-Links • Africa Online, ISP service
ess interests in Africa • Partnering to ensure EASSy cable access for Africa • Evolving to a NGN network • Increasing speed and
Equity markets Market performance JSE Limited (ZAR per ordinary share) year ender March 31, 2006 2007 Closing price Highest pri
The telecommunications industry Liberalisation of the South African telecommunications market and increasing competition Telkom
fixed-line services and dial-up Internet traffic being substituted by our ADSL service, as well as the decrease in the number o
The telecommunications industry continued to promote convergence and establish the legal framework for convergence in the broad
licences be granted to successful applicants in 13 of these areas. It is expected that further licences will be issued in the 2
The telecommunications industry continued Africa and international leased lines. ICASA expressed the preliminary view that Telk
• services to be provided within 30 days from application; • the provision of uncapped local bandwidth; • the guarantees of min
The telecommunications industry continued implement number portability until the functional specification regulations are deter
Section 2 Management review Retaining Telkom’s critical skills is a vital element to building for a converged future. Our emplo
Chairman’s review It is with pleasure that I present to you my first review and introduce myself to the Telkom Group shareholde
Despite the consequent pressure on EBITDA margins and the 42.9% increase in cash flows utilised in investing activities, the Gr
Chairman’s review continued Corporate governance Ensuring that Telkom’s corporate governance is of the highest standard is one
During the year under review, Thenjiwe Chikane resigned from the Board on June 19, 2006, followed by the previous Chairman, Nom
Chief Executive Officer’s review Describing the nature of the current telecommunication landscape and Telkom’s responses to it
Vodacom again delivered an exceptional performance increasing its customer base 28.2% to 30.2 million. Telkom now enters a chal
Chief Executive Officer’s review continued and training of our employees. Telkom continues to invest significantly in our emplo
As a result of sound cost management, Vodacom has ensured that its revenue growth has been translated into increased profits fr
Chief Executive Officer’s review continued Retaining revenue and generating growth, including expansion in Africa Telkom is pur
Telkom is also seeking to execute its Pan African hubbing strategy through its investments in Multi-Links in Nigeria and Africa
Chief Financial Officer’s review Group operating revenue Group operating revenue increased 8.4% to R51,619 million (2006: R47,6
Group operating expenses Group operating expenses increased 12.3% to R37,533 million (2006: R33,428 million) in the year ended
Chief Financial Officer’s review continued issuance of R4,651 million nominal value commercial paper bills, to fund a portion o
Online, Rossal No 65 and Acajou Investments subsidiaries are fully consolidated in the Telkom Group’s consolidated financial st
Board of Directors Shirley Lue Arnold was appointed to the Board on November 1, 2006 as chairperson and non-executive director.
Mark Lamberti was appointed to the Board on May 29, 2007. Mr Lamberti is the non-executive Chairman of Massmart Holdings Limite
Board of Directors continued Keitumetse Matthews was appointed to the Board on June 19, 2006. Ms Matthews is a businesswoman an
Dumisani Tabata was appointed to the Board on September 20, 2004. Mr Tabata is a director and founding member of Smith Tabata I
Chief officers Reuben September was appointed to the Board on May 8, 2007 following his appointment as acting Chief Executive O
Ouma Rasethaba was appointed as acting Chief Corporate Affairs Officer on May 1, 2007. She joined Telkom in February 2006 servi
Management team Name Designation Group Executive, Human Resources Ms Mokoena is responsible for Telkom’s human capital manageme
Name Designation Managing Executive, Network Core Operations Mr Hess is responsible for the technical and operational managemen
page 40 Telkom Annual Report 07
Section 3 Sustainability review Sustainability development that impacts positively on our country’s growth continues to be an i
Sustainability review continued Sustainability review Telkom’s sustainability initiatives place great value on enhancing the Gr
Customer engagement In 2006, Telkom embarked on a customer centricity journey that followed an exhaustive process in endeavouri
Sustainability review continued • compiling and distributing an Electronic Newsletter on a quarterly basis. • compiling and dis
For stakeholders such as Parliament and ICASA the engagement activities involved the following: • Written submissions to all Go
Sustainability review continued • The SATNAC Conference where, Telkom as the host sponsor, invites a contingent of reporters to
Telkom has, in the current year, been involved in a vigorous process of ensuring that the evolution into the Next Generation Ne
Sustainability review continued Requirements Telkom’s commitment Require access to management as and when required. Telkom has
Corporate governance Compliance The Telkom Board subscribes to the values of good corporate governance as espoused in the Code
Corporate governance continued The members’ resignations and appointments to the Telkom Board of Directors are as follows: educ
Committees The Board has established a number of committees as set out below. In respect of the committees, Telkom’s non- compl
Corporate governance continued Share dealings In line with JSE Listings Requirements and the Group’s insider trading policy, ex
Key differences between NYSE corporate governance listing rules and Telkom practice are: NYSE rules Board of Directors Composit
Corporate governance continued Key differences between NYSE corporate governance listing rules and Telkom practice are: NYSE ru
Internal controls Telkom has a well established internal control environment monitored by the ARMC, whose duties include: • ass
Corporate governance continued risk and control processes for controlling its activities and managing its risks set down in the
Risk management Risk management’s goal within Telkom is to align any identified risks with the Group’s corporate values and ris
Risk management continued • Control environment • Objective setting • Event identification • Risk assessment • Risk response •
• Addressing any significant disagreements between the Board of Directors of Telkom SA Limited, Management and the External Aud
Risk management continued Insurance Team transfers risk to the insurance market where this is deemed to be the most appropriate
information on the risks is also available on Telkom’s website www.telkom.co.za/ir and also published and filed with the Securi
Risk management continued been made. The interpretation of existing regulations, the adoption of new policies or regulations th
Black Economic Empowerment Introduction Telkom has always viewed South Africa’s effective transformation as imperative in its q
Black Economic Empowerment continued Telkom’s suppliers are required to comply with the BEE Act, the Employment Equity Act, the
Human capital management Human capital management involves talent management and the preservation of critical skills which are
Human capital continued Formal qualification profile The overall qualifications profile of the organisation is illustrated belo
Telkom has identified targets to address areas of underrepresentation, as well as affirmative action measures and interventions
Human capital continued Compensation and benefits Telkom rewards performance through a number of variable remuneration plans. T
Performance management A performance management system (that includes the creation of development plans for each employee) is i
Human capital continued employee or continuation member contributes, provided it does not exceed a maximum amount that ranges b
Leadership behaviour is measured using a multi-rater questionnaire. This allows Telkom to provide focused development intervent
Safety, health and environment Background Telkom’s SHE Governance portfolio is manifested in a set of organisational and busine
During the 2007 financial year the SHE Council and the Legal SHE Governance Forum as stipulated in the Occupational Health and
Safety, health and environment continued SHE governance Since inception, the SHE governance forum has achieved major milestones
employee to take self-responsibility and ownership for their health and wellness. Importantly, employee wellness and health is
Safety, health and environment continued Due to requirements of confidentiality and privacy as well as medical and clinical exp
Solutions company, using employee demographic data and financial modelling, the results of which showed an overall prevalence r
Safety, health and environment continued domicile medical professional who is also conducting risk assessments. In the 2007 fin
Looking forward Telkom is currently in the process of obtaining ISO 14001 and OHSAS 18001 re-certification. Telkom has revised
Safety, health and environment continued Recyclable waste management Telkom’s sustainable management of waste, such as paper, p
A request was received from Telkom’s Network Infrastructure Provisioning service organisation to provide a scientific basis for
Safety, health and environment continued This then led to a further intervention whereby a ‘chimneysweep’ device was fitted bet
Corporate social investment Telkom continues to create awareness of its responsibility to social investment and promoting the c
Corporate social investment continued in some of the poorest and most remote areas across the country. These were in the Free S
The Foundation continued its support for teachers when it organised the 8th Aggrey Klaaste Maths, Science and Technology Educat
Corporate social investment continued Pro Ams has impacted positively on the Company’s exposure and brand awareness. Vodacom is
University of Witwatersrand Centre of Excellence: Vodacom joined Telkom and Siemens as one of the sponsors of the Wits Centre o
Corporate social investment continued Committee against crime: The Foundation is in the second year of funding a Northern Cape
Global Reporting Initiative (GRI) content index Telkom has opted for an incremental adoption of the guidelines to the GRI index
Sustainability review continued Item Comment and page reference Major stakeholders. Approaches to stakeholder consultation. Sus
Section 4 Performance review Extracting efficiencies, improving customer service and growing its market through new products an
Five-year operational review for the years ended March 31, 2003 2003 2004 2004 2005 2005 2006 2007 2007CAGR CAGR 2006 (%) (%) F
Operational review Overview of its business Telkom is one of the largest communication service providers in South Africa, provi
Operational review continued • Content over a “Quality of Service” network (IPTV including broadcast and on-demand TV and inter
voicemail service are also bundled with value added calling plans such as Telkom Closer to further enhance the value to its cus
Operational review continued Connections include new line orders resulting primarily from changes in service and, to a lesser e
Traffic Year ended March 31, 2005 2006 2007 (in thousands, except percentages) Local1 Long distance1 Fixed-to-mobile Internatio
Operational review continued Domestic mobile interconnection traffic includes traffic from mobile operators terminating on Telk
Page 1:
Telkom SA Limited
Page 2:
Telkom is one of Africa's largest integrated communication serv
Page 3:
Section 1 Group overview Telkom is bringing the Next Generat
Page 4:
Telkom’s vision To be a leading customer and employee centred I
Page 5:
Telkom group structure Vodacom Group – 50% Joint Venture Vodaco
Page 6:
Financial review summary Steady growth of annuity revenue and d
Page 7:
Operational review summary Consumer demand remains strong as Te
Page 8:
Telkom’s investment case Growing further into mobile and data (
Page 9:
The Telkom footprint Telkom Group busine • Growing African asse
Page 10:
ess interests in Africa • Partnering to ensure EASSy cable acce
Page 11:
Equity markets Market performance JSE Limited (ZAR per ordinary
Page 12:
The telecommunications industry Liberalisation of the South Afr
Page 13:
fixed-line services and dial-up Internet traffic being substitu
Page 14:
The telecommunications industry continued to promote convergenc
Page 15:
licences be granted to successful applicants in 13 of these are
Page 16:
The telecommunications industry continued Africa and internatio
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• services to be provided within 30 days from application; • th
Page 18:
The telecommunications industry continued implement number port
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Section 2 Management review Retaining Telkom’s critical skills
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Chairman’s review It is with pleasure that I present to you my
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Despite the consequent pressure on EBITDA margins and the 42.9%
Page 22:
Chairman’s review continued Corporate governance Ensuring that
Page 23:
During the year under review, Thenjiwe Chikane resigned from th
Page 24:
Chief Executive Officer’s review Describing the nature of the c
Page 25:
Vodacom again delivered an exceptional performance increasing i
Page 26:
Chief Executive Officer’s review continued and training of our
Page 27:
As a result of sound cost management, Vodacom has ensured that
Page 28:
Chief Executive Officer’s review continued Retaining revenue an
Page 29:
Telkom is also seeking to execute its Pan African hubbing strat
Page 30:
Chief Financial Officer’s review Group operating revenue Group
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Group operating expenses Group operating expenses increased 12.
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Chief Financial Officer’s review continued issuance of R4,651 m
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Online, Rossal No 65 and Acajou Investments subsidiaries are fu
Page 34:
Board of Directors Shirley Lue Arnold was appointed to the Boar
Page 35:
Mark Lamberti was appointed to the Board on May 29, 2007. Mr La
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Board of Directors continued Keitumetse Matthews was appointed
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Dumisani Tabata was appointed to the Board on September 20, 200
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Chief officers Reuben September was appointed to the Board on M
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Ouma Rasethaba was appointed as acting Chief Corporate Affairs
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Management team Name Designation Group Executive, Human Resourc
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Name Designation Managing Executive, Network Core Operations Mr
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page 40 Telkom
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Section 3 Sustainability review Sustainability development that
Page 44:
Sustainability review continued Sustainability review Telkom’s
Page 45:
Customer engagement In 2006, Telkom embarked on a customer cent
Page 46:
Sustainability review continued • compiling and distributing an
Page 47:
For stakeholders such as Parliament and ICASA the engagement ac
Page 48:
Sustainability review continued • The SATNAC Conference where,
Page 49:
Telkom has, in the current year, been involved in a vigorous pr
Page 50:
Sustainability review continued Requirements Telkom’s commitmen
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Corporate governance Compliance The Telkom Board subscribes to
Page 52:
Corporate governance continued The members’ resignations and ap
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Committees The Board has established a number of committees as
Page 54:
Corporate governance continued Share dealings In line with JSE
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Key differences between NYSE corporate governance listing rules
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Corporate governance continued Key differences between NYSE cor
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Internal controls Telkom has a well established internal contro
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Corporate governance continued risk and control processes for c
Page 59:
Risk management Risk management’s goal within Telkom is to alig
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Risk management continued • Control environment • Objective set
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• Addressing any significant disagreements between the Board of
Page 62:
Risk management continued Insurance Team transfers risk to the
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information on the risks is also available on Telkom’s website
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Risk management continued been made. The interpretation of exis
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Black Economic Empowerment Introduction Telkom has always viewe
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Black Economic Empowerment continued Telkom’s suppliers are req
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Human capital management Human capital management involves tale
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Human capital continued Formal qualification profile The overal
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Telkom has identified targets to address areas of underrepresen
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Human capital continued Compensation and benefits Telkom reward
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Performance management A performance management system (that in
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Human capital continued employee or continuation member contrib
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Leadership behaviour is measured using a multi-rater questionna
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Safety, health and environment Background Telkom’s SHE Governan
Page 75:
During the 2007 financial year the SHE Council and the Legal SH
Page 76:
Safety, health and environment continued SHE governance Since i
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employee to take self-responsibility and ownership for their he
Page 78:
Safety, health and environment continued Due to requirements of
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Solutions company, using employee demographic data and financia
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Safety, health and environment continued domicile medical profe
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Looking forward Telkom is currently in the process of obtaining
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Safety, health and environment continued Recyclable waste manag
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A request was received from Telkom’s Network Infrastructure Pro
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Safety, health and environment continued This then led to a fur
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Corporate social investment Telkom continues to create awarenes
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Corporate social investment continued in some of the poorest an
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The Foundation continued its support for teachers when it organ
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Corporate social investment continued Pro Ams has impacted posi
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University of Witwatersrand Centre of Excellence: Vodacom joine
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Corporate social investment continued Committee against crime:
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Global Reporting Initiative (GRI) content index Telkom has opte
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Sustainability review continued Item Comment and page reference
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Section 4 Performance review Extracting efficiencies, improving
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Five-year operational review for the years ended March 31, 2003
Page 95:
Operational review Overview of its business Telkom is one of th
Page 96:
Operational review continued • Content over a “Quality of Servi
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voicemail service are also bundled with value added calling pla
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Operational review continued Connections include new line order
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Traffic Year ended March 31, 2005 2006 2007 (in thousands, exce
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Operational review continued Domestic mobile interconnection tr
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