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118
Telkom Annual Report 2009
Financial review (continued)
Fixed-line employee expenses
Year ended March 31,
(in millions, except percentages and 2007 2008 2009 2008/2007 2009/2008
number of employees) ZAR ZAR ZAR % change % change
Salaries and wages 5,095 5,509 5,746 8.1 4.3
Benefits 2,673 2,671 2,981 (0.1) 11.6
Workforce reduction expenses 24 3 8 (87.5) 166.7
Employee related expenses capitalised (696) (786) (736) 12.9 (6.4)
Employee expenses 7,096 7,397 7,999 4.2 8.1
Number of full-time, fixed-line employees
(at period end) 25,864 24,879 23,520 (3.8) (5.5)
Employee expenses increased in the year
ended March 31, 2009 primarily due to a
higher provision for medical aid for
pensioners as a result of increased interest
costs, higher salaries and wages as a result
of average annual salary increases of
10.85% as well as a higher leave
provision, partially offset by a lower
number of employees. Employee expenses
increased in the year ended March 31,
2008 primarily due to higher salaries and
wages as a result of average annual salary
increases of 7.0%, and increased share
option grant expenses as a result of the
higher number of shares granted in the
year, partially offset by lower team
awards.
Salaries and wages increased in the year
ended March 31, 2009 primarily due to
average annual salary increases of
10.85%, partially offset by lower
headcount. Salaries and wages increased
in the year ended March 31, 2008
primarily due to average annual salary
increases of 7.0% and were further
impacted by increased payments to
contractors from original equipment
manufacturers.
Benefits include allowances, such as
bonuses, company contributions to medical
aid, pension and retirement funds, leave
provisions, workmen’s compensation and
levies payable for skills development.
Benefits increased in the 2009 financial
year primarily due to a higher provision for
medical aid for pensioners as a result of
increased interest costs and a higher
provision for leave as a result of annual
salary increases and a decrease in leave
days taken. Benefits decreased in the
2008 financial year primarily due to lower
team awards, a lower provision for
medical aid for pensioners as a result of the
annuity policy qualifying as a plan asset in
June 2006, a lower provision for leave as
a result of the decrease in the number of
employees and lower training expenses,
partially offset by increased share option
grant expenses as a result of the higher
number of shares allocated during the year.
Workforce reduction expenses include the
cost of voluntary early retirement,
termination severance packages offered to
employees and the cost of social plan
expense to prepare affected employees for
new careers outside Telkom. Workforce
reduction expenses decreased substantially
in the years ended March 31, 2009 and
2008 due to the moratorium on voluntary
severance packages taken in the 2007
financial year. An additional seven
employees in the 2009 financial year, four
employees in the 2008 financial year and
13 employees in the 2007 financial year
left Telkom as part of the conclusion of
Telkom’s workforce reduction initiatives for
the 2005 financial year.
Employee related expenses capitalised
include employee related expenses
associated with construction and
infrastructure development projects.
Employee related expenses capitalised
decreased in the year ended March 31,
2009 primarily due to an increase in the
use of subcontractors. Employee related
expenses capitalised increased in the year
ended March 31, 2008 primarily due to
annual salary increases and increased
capital expenditures on projects during the
year.
Payments to other network operators.
Payments to other network operators
include settlement payments paid to the
three South African mobile communications
network operators and commencing in the
2008 financial year, Neotel, for
terminating calls on their networks and to
international network operators for
terminating outgoing international calls and
traffic transiting through their networks.
The following table sets forth information
related to our payments to other network
operators for the periods indicated.