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18 Telkom Annual Report 2009 Chairman’s review (continued) We explore continue to all avenues that will provide us with growth Our strategic direction, the implementation of Telkom’s new structure and the increasing challenges of the competitive and regulatory environment are explained more fully in the Chief Executive Officer’s review. Management continues to identify opportunities for growth, particularly in sub- Saharan Africa. The Vodacom transaction The conclusion of the sale of 15% of our shares in Vodacom to Vodafone and the unbundling of the remaining 35% to shareholders after year end allows us to enter the South African mobile market and provide fully converged services. Telkom is now a smaller company which allows us to put more focus on our key growth areas. The Board In the year under review, Mark Lamberti resigned on June 3, 2008 and the PIC representative, Athol Rhoda, resigned on July 3, 2008. I would like to thank them both for their commitment and support. Brian Molefe replaced Athol Rhoda as the PIC’s representative. We were pleased to welcome Peter Joubert, director of companies, on August 12, 2008, and David Barber, former Chief Financial Officer of AngloCoal, on September 1, 2008. The change in our articles of association allowed our new Chief Financial Officer, Peter Nelson, to join the Board on December 8, 2008. Detailed curriculum vitae can be viewed on pages 28 and 29. Empowerment While we remain a champion of Broad Based Black Economic Empowerment (BBBEE) with excellent performances in some areas (10 out of 10 for management control and 19.1 out of 20 for preferential procurement), our overall BBBEE status is relatively low – a level 6 contributor at the last verification. A new BBBEE strategy will be implemented to rectify this situation. See page 58. Confederations Cup and the 2010 Soccer World Cup A significant accolade for the year under review was being appointed FIFA’s main partner for the development of fixed-line network infrastructures for these major sports events. Some R118 million was invested in the necessary equipment and cabling for the soccer stadia around South Africa during the year under review. An additional R832 million is expected to be spent in the 2010 and 2011 financial years. FIFA’s president, Sepp Blatter has been most complimentary about Telkom’s services (see box alongside). A major spinoff of the project is that all the equipment used will benefit local and other communities. Appreciation A special note of appreciation must go the Telkom Board members for their tireless commitment to Telkom under demanding conditions, our employees, and all our customers. Telkom has remained, through even more difficult times in our history as one of South Africa’s leading ICT companies, and the Board and Executive will continue to provide value to our shareholders and service to the country as a strategic national asset. Shirley Lue Arnold Chairman
On target for 2010 Telkom Annual Report 2009 19 ‘For the first time ever, the FIFA World Cup will kick off on African soil. This is an exciting, historic moment for Africa, and YOU are the people making it happen. For me, it will be the realisation of a dream. I have seen what football means to Africa. With so many talented and outstanding African players, coaches, clubs and national teams it is fitting that the 2010 FIFA World Cup should find a home on this continent. I have felt South Africa’s enormous enthusiasm – from the blue-collar worker to the top executive. This country has a phenomenal spirit, and I am privileged to share in the hope and inspiration that the 2010 FIFA World Cup is bringing to your people. You have shown the world that South Africa can achieve wonders, and there is no doubt in my mind that you will be ready. Telkom is ideally placed to make this a FIFA World Cup to be remembered. You are making history. Not only is this the first time the tournament is being hosted in Africa, but it is also the first time the event will be broadcast in high definition. With the huge volume of voice and data traffic that will be moving through the FIFA event network, your work is critical in facilitating the successful broadcast of the event. Telkom is on target for meeting the FIFA Confederations Cup 2009 requirements. And the completion of the network will allow Telkom to meet its requirements for 2010. This is how I know Telkom can deliver. Your efforts not only guarantee the smooth running of the games, but also build an infrastructure that will benefit your country long after we are gone. This is the kind of legacy we hope the 2010 FIFA World Cup will leave in Africa, and you are delivering an enormous gift, not just to us, but also to your own people. I have seen what this nation can do – the spirit of Ubuntu that pulls you together. With teamwork you can achieve anything and Telkom is no different. I have every confidence in you, the Telkom staff, to make this the greatest FIFA World Cup we have ever seen’ – Sepp Blatter. 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
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Page 13 and 14: a - Euros a - Euros a - Euros 0.25
Page 15 and 16: ated management team with experienc
Page 17: The regulatory environment The regu
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Page 23 and 24: • Remodelling - reaching for new
Page 25 and 26: in this annual report has been upda
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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
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Page 45 and 46: Share dealings In line with JSE Lis
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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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Page 63 and 64: Headcount movement Compensation and
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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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346 VOTING AND PROXIES Ordinary sha
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Notes Telkom Annual Report 2009 1.
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