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12 Telkom Annual Report 2009 The telecommunications industry (continued) Telkom has made significant progress in rebalancing its fixed-line tariffs... by December 31, 2003. Telkom has met with Neotel to discuss its request for implementing carrier pre-selection. Until Neotel’s interconnection systems and its inter-operator process and systems to support carrier pre-selection become available, Telkom cannot fully implement carrier pre-selection. However, Telkom does not believe it can meet the 10 months deadline for automatic carrier preselection. Number portability The Telecommunications Act mandated that number portability, to enable customers to retain their fixed-line and mobile telephone numbers if they switch between fixed-line operators or between mobile operators, be introduced. These provisions were retained in the Electronic Communications Act. A framework number portability regulation was published at the end of 2004 that generically provides for the introduction of fixed-to-fixed and mobile-to-mobile number portability. Telkom is required to implement number portability in blocks of 10,000 numbers within two months after Neotel launches such retail services and individual number portability within 12 months of receiving a request from Neotel. Telkom has received a request from Neotel to implement both block and individual number portability and Telkom and Neotel implemented number portability in blocks of 10,000 and 1,000 numbers in May 2009. After several delays mobile number portability phase one was launched on November 11, 2006. Phase 2, which was implemented during April 2007, includes multi-line porting, secure file transfer protocol access to third parties and operational software upgrades on the central reference data base. The set-up and per-operator costs are typically the largest cost components of implementing number portability. Similar to carrier pre-selection, there is a risk of not fully recovering system set-up costs. The implementation of these requirements in a timely manner, could result in Telkom’s business being disrupted and cause its net profit to decline and the implementation of these requirements will likely further increase competition and cause churn rates to increase. Fees and tariffs Telkom has made significant progress in rebalancing its fixed-line tariffs with a view to focusing more on the relationship between the actual costs and tariffs of subscriptions and connections and traffic in order to more accurately reflect underlying costs and to be more competitive. Regulations made under the repealed Telecommunications Act, but which are still in effect, imposed a price cap (3.5% below inflation, effectively implying a continuous real decrease in prices) on a basket of Telkom’s specified services. These include installations; pre-paid and postpaid line rentals; local, long distance and international calls; fixed-to-mobile calls; public payphone calls; ISDN services; its Diginet product and its Megaline product. A similar cap applies to a sub-basket of those services provided to residential customers, including leased lines up to and including lines of 2 Mbps of capacity and the rental and installation of business exchange lines. Approximately 57% of Telkom’s operating revenue in the year ended March 31, 2008 was included in this basket, compared to approximately 54% in the year ended March 31, 2009.
a - Euros a - Euros a - Euros 0.25 0.20 0.15 0.10 0.05 0.00 0.20 0.15 0.10 0.05 0.00 1.0 0.8 0.6 0.4 0.2 0.0 Local peak (3 minute) Source: Tarifica 4th quarter 2008 Slovak Republic Slovak Republic Local off peak (3 minute) Source: Tarifica 4th quarter 2008 Malta Ireland Telkom Cyprus Luxembourg Turkey Croatia UK (BT) To adjacent country Peak (3 minutes) Source: Tarifica 4th quarter 2008 Turkey Cyprus Cyprus Malta Sweden Slovenia Norway Germany Switzerland Iceland Netherlands Telkom Iceland Bulgaria Romania Luxembourg Slovenia Estonia Bulgaria Telkom Hungary Lithuania Denmark Turkey Slovenia France Croatia Romania Luxembourg Italy Austria Bulgaria Latvia Denmark Austria Denmark Netherlands Poland Average Poland Czech Republic Netherlands Switzerland Latvia Sweden Slovak Republic Estonia Spain Finland Germany Lithuania Average Czech Republic Finland Malta Latvia Norway Spain Average Ireland Estonia Iceland Hungary UK (BT) Italy Telkom Annual Report 2009 13 Independent benchmarking of Telkom’s pricing – Tarifica review, 4th quarter 2008 Telkom continues to manage its pricing actively in order to continually offer enhanced value to our customers. We intend to educate all our customers as to the global attractiveness of our pricing and the value offered by the fixed-line service. Telkom’s mobile offering will follow the lead of the fixed-line in terms of competitive pricing. Below find a selection of Tarifica’s findings. Ireland France Hungary Greece Poland Spain Belgium Switzerland France Italy Portugal Norway Portugal Greece Portugal Croatia Czech Republic Sweden Germany Austria Belgium UK (BT) Belgium Finland Lithuania Romania Greece Group overview Management review Sustainability review Performance review Financial statements Company Financial Information
Page 1 and 2: We are... one of Africa’s largest
Page 3 and 4: Telkom shareholding as at March 31,
Page 5 and 6: Grow profitable revenue through wir
Page 7 and 8: 600 500 400 300 200 100 0 07 08 09
Page 9 and 10: The telecommunications industry Con
Page 11: egulation that stipulated standard
Page 15 and 16: ated management team with experienc
Page 17 and 18: The regulatory environment The regu
Page 19 and 20: On target for 2010 Telkom Annual Re
Page 21 and 22: Online impairments, the fixed-line
Page 23 and 24: • Remodelling - reaching for new
Page 25 and 26: in this annual report has been upda
Page 27 and 28: Capital expenditure for the Group i
Page 29 and 30: More than100 years of combined tele
Page 31 and 32: Management team Telkom Annual Repor
Page 33 and 34: Telkom Annual Report 2009 33 Age at
Page 35 and 36: uild a partnership with communities
Page 37 and 38: Customers: Through our Customer Cen
Page 39 and 40: • Interfacing with the media Whil
Page 41 and 42: Partnering with Human Resources Gro
Page 43 and 44: The members’ resignations and app
Page 45 and 46: Share dealings In line with JSE Lis
Page 47 and 48: NYSE rules Telkom practice Telkom A
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Page 51 and 52: Telkom Annual Report 2009 51 Enterp
Page 53 and 54: provider, we practice a risk manage
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Page 57 and 58: addressing a number of significant
Page 59 and 60: There was a major Over the past dec
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Headcount movement Compensation and
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• Accelerated development of wome
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14,500 union members participated i
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were admitted to the university in
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ole in exposing students to the rea
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Sick leave indices • We saved R2
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These will be augmented by another
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Some of the key deliverables are:
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Fittingly, the initiative was launc
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Sponsorships Sponsorships continue
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Item Comment and reference Governan
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espond to competitive challenges Pe
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Operational review History and deve
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service. All costs including instal
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Traffic was adversely affected in b
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Telkom’s focus on bringing new in
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esponse of the CDMA operators to ou
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MWEB Africa On April 21, 2009, we a
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VPN model that allows other service
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services and also to support Telkom
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Telkom’s fixed-line voice busines
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Results of operations The Telkom Gr
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EBITDA can be reconciled to operati
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Telkom Annual Report 2009 109 Finan
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Fixed-line operating revenue increa
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The following table sets forth info
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Interconnection revenue Year ended
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Telkom Annual Report 2009 117 Fixed
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Fixed-line payments to other networ
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Service fees increased in the year
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Vodacom’s operating revenue from
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our fixed-line business, which were
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Vodacom’s selling, general and ad
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The increase in other operating rev
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commercial paper bills, as well as
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The following table sets forth our
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challeng Consolidated financial sta
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138 Telkom Annual Report 2009
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346 VOTING AND PROXIES Ordinary sha
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Notes Telkom Annual Report 2009 1.
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