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Telkom Annual Report 2009 117
Fixed-line operating expenses
Year ended March 31,
2007 2008 2009 2008/ 2009/
% of % of % of 2007 2008
(in millions, except percentages) ZAR revenue ZAR revenue ZAR revenue % change % change
Employee expenses (1) 7,096 21.9 7,397 22.7 7,999 23.8 4.2 8.1
Payments to other
network operators
Selling, general and administrative
6,461 20.0 6,902 21.2 7,536 22.3 6.8 9.2
expenses (2)(3) 3,976 12.3 3,899 11.9 6,582 19.5 (1.9) 68.8
Service fees 2,206 6.8 2,413 7.4 2,761 8.2 9.4 14.4
Operating leases
Depreciation, amortisation,
762 2.4 619 1.9 613 1.8 (18.8) (1.0)
impairments and write-offs 3,582 11.1 3,732 11.5 4,358 13.0 4.2 16.8
Fixed-line operating expenses 24,083 74.5 24,962 76.6 29,849 88.7 3.6 19.6
Notes:
(1) Employee expenses include workforce reduction expenses of R8 million, R3 million and R24 million in the years ended March 31, 2009, 2008 and
2007, respectively.
(2) In the year ended March 31, 2007 we recorded a provision of R527 million for probable liabilities related to Telkom’s arbitration with Telcordia,
excluding legal fees, of which R510 million is included in selling, general and administrative expenses and R11 million for interest and R6 million for
foreign exchange rate effect is included in finance charges. In the year ended March 31, 2008 we recorded a provision of R569 million for probable
liabilities related to Telkom’s arbitration with Telcordia, including legal fees. The movement in the provision is due to increased interest of R53 million and
foreign exchange rate effect of R52 million, which are included in finance charges, partially offset by a provisional payment made in respect of specific
sub-claims within the Telcordia claim. In the year ended March 31, 2009 we recorded a provision of R664 million for probable liabilities related to
Telkom’s arbitration with Telcordia, including legal fees. The movement in the provision is due to increased interest of R11 million and foreign exchange
rate effect of R94 million, which are included in finance charges, partially offset by a R10 million reversal of the provision which is included in selling,
general and administrative expenses.
(3) Includes a R254 million and R217 million impairment relating to Telkom Media in the 2009 and 2008 financial years, respectively and R1,843 million
relating to the impairment of Multi-Links, R85 million impairment relating to Africa Online in the 2009 financial year.
Fixed-line operating expenses increased in
the 2009 financial year primarily due to
increased selling, general and administrative
expenses, payments to other network
operators, depreciation, amortisation,
impairment and write-offs, employee
expenses and service fees. Fixed-line
operating expenses increased in the 2008
financial year primarily due to increased
payments to other network operators,
employee expenses, service fees and
depreciation, amortisation, impairment and
write-offs, partially offset by lower leases and
selling, general and administrative expenses.
Employee expenses. Employee expenses
consist mainly of salaries and wages for
employees, including bonuses and other
incentives, benefits and workforce
reduction expenses.
The following table sets forth information
related to our employee expenses for the
years indicated.
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