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210 Telkom Annual Report 2009 Notes to the consolidated annual financial statements (continued) for the three years ended March 31, 2009 30. EMPLOYEE BENEFITS (continued) Medical benefits (continued) The valuation results are extremely sensitive to changes in the underlying assumptions. The following table provides an indication of the impact of changing some of the valuation assumptions above: The Trudon benefit obligation of R21 million has been excluded from the sensitivity analysis below. Current assumption Decrease Increase Rm Rm Rm Medical cost inflation rate 7.7% -1.0% +1.0% Benefit obligation 5,389 (736) 921 Percentage change (13.7)% 17.1% Service cost and interest cost 2009/2010 555 (84) 108 Percentage change (15.1)% 19.5 % Discount rate 8.7% -1.0% +1.0% Benefit obligation 5,389 933 (734) Percentage change 17.3% (13.6)% Service cost and interest cost 2009/2010 555 46 (37) Percentage change 8.3% (6.7)% Post-retirement mortality rate PA(90) Ultimate-1 -10.0% +10.0% Benefit obligation 5,389 221 (197) Percentage change 4.1% (3.7)% Service cost and interest cost 2009/2010 555 23 (20) Percentage change 4.1% (3.6)% 2007 2008 2009 The fund portfolio consists of the following: Equities (%) 59 56 30 Bonds (%) 3 2 2 Cash and money market investments (%) 21 33 10 Foreign investments (%) 9 9 9 Insurance policies (%) 8 – 49 Telephone rebates Telkom provides telephone rebates to its pensioners. The most recent actuarial valuation was performed as at March 31, 2009. Eligible employees must be employed by Telkom until retirement age to qualify for the telephone rebates. The scheme is a defined benefit plan. 2007 2008 2009 Rm Rm Rm The status of the telephone rebate liability is disclosed below: Benefit obligation opening balance 251 307 443 Service cost 4 3 6 Interest cost 19 22 39 Actuarial (gain)/loss (39) 133 19 Amendments 93 – – Benefits paid (21) (22) (23) Present value of unfunded obligation 307 443 484 Unrecognised net actuarial loss and service cost* (25) (156) (159) Liability as disclosed in the balance sheet (refer to note 29) 282 287 325 * The major increase in 2008 is attributable to the change in the rebate inflation rate.
30. EMPLOYEE BENEFITS (continued) Telephone rebates (continued) Principal actuarial assumptions were as follows: Telkom Annual Report 2009 211 Notes to the consolidated annual financial statements (continued) for the three years ended March 31, 2009 2007 2008 2009 Discount rate (%) 7.5 9.0 8.7 Rebate inflation rate (%) 0.0 4.0 4.0 Contractual retirement age 65 65 65 Average retirement age 60 60 60 The assumed rates of mortality are determined by reference to the PA(90) Ultimate table, minus one year age rating as published by the Institute and Faculty of Actuaries in London and Scotland. Number of members 19,515 18,766 17,034 Number of pensioners 10,918 10,680 10,499 Telkom Conditional Share Plan Telkom’s shareholders approved the Telkom Conditional Share Plan at the January 2004 Annual General Meeting. The scheme covers both operational and management employees and is aimed at giving shares to Telkom employees, at a RNil exercise price, at the end of the vesting period. The vesting period for the operational employees shares awarded in 2004 and 2005 is 0% in year one, 33% in each of the three years thereafter, while the shares allocated in 2006 and 2007 together with management shares vest fully after three years. Although the number of shares awarded to employees will be communicated at the grant date, the ultimate number of shares that vest may differ based on certain performance conditions being met (refer to note 24). The Telkom Board approved the fourth enhanced allocation of shares to employees as at September 24, 2007, with a grant date of September 27, 2007, the day that the employees and Telkom shared a common understanding of the terms and conditions of the grant. A total number of 6,089,810 shares were granted. The Board has also approved an enhanced allocation for the November 2006 grant on September 4, 2007 with a grant date of September 27, 2007. The number of additional shares granted with regard to the 2006 allocation is 4,966,860 shares. The weighted average remaining vesting period for the shares outstanding as at March 31, 2009 is 0.71 years (2008: 1.25 years; 2007: 1.75 years). 2007 2008 2009 The following table illustrates the movement of the maximum number of shares that will vest to employees for the August 2004 grant: Outstanding at beginning of the year 2,414,207 1,883,991 420,590 Granted during the year 1,212 252 – Forfeited during the year (80,923) (43,790) (3,985) Vested during the year (450,505) (1,419,863) (416,605) Outstanding at end of the year 1,883,991 420,590 – The following table illustrates the movement of the maximum number of shares that will vest to employees for the June 2005 grant: Outstanding at beginning of the year 1,930,687 1,864,041 1,435,387 Granted during the year 1,005 3,469 52,954 Forfeited during the year (67,651) (108,177) (45,188) Vested during the year – (323,946) (1,135,424) Outstanding at end of the year 1,864,041 1,435,387 307,729
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We are... one of Africa’s largest
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Telkom shareholding as at March 31,
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Grow profitable revenue through wir
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600 500 400 300 200 100 0 07 08 09
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The telecommunications industry Con
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egulation that stipulated standard
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a - Euros a - Euros a - Euros 0.25
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ated management team with experienc
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The regulatory environment The regu
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On target for 2010 Telkom Annual Re
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Online impairments, the fixed-line
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• Remodelling - reaching for new
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in this annual report has been upda
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Capital expenditure for the Group i
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More than100 years of combined tele
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Management team Telkom Annual Repor
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Telkom Annual Report 2009 33 Age at
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uild a partnership with communities
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Customers: Through our Customer Cen
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• Interfacing with the media Whil
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Partnering with Human Resources Gro
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The members’ resignations and app
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Share dealings In line with JSE Lis
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NYSE rules Telkom practice Telkom A
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the codes of conduct and ethics tha
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Telkom Annual Report 2009 51 Enterp
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provider, we practice a risk manage
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egulate the business of dealers in
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addressing a number of significant
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There was a major Over the past dec
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payment policy that facilitates the
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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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140 Telkom Annual Report 2009 Direc
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142 Telkom Annual Report 2009 Conso
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144 Telkom Annual Report 2009 Conso
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146 Telkom Annual Report 2009 Notes
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338 Telkom Annual Report 2009 Share
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340 Telkom Annual Report 2009 Defin
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344 Telkom Annual Report 2009 Notic
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346 VOTING AND PROXIES Ordinary sha
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Notes Telkom Annual Report 2009 1.
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