Telkom AR front.qxp

216
Telkom Annual Report 2009
Notes to the consolidated annual financial statements (continued)
for the three years ended March 31, 2009
36. ACQUISITION AND DISPOSALS OF SUBSIDIARIES, JOINT VENTURES AND MINORITY INTERESTS
36.1 Acquisitions
By Telkom
Multi-Links Telecommunications Limited (Multi-Links Telecommunications) (25%)
Telkom International (Proprietary) Limited acquired 75% of the issued
share capital of Multi-Links Telecommunications Limited from Kenston
Investment Limited on May 1, 2007. Telkom also granted Kenston the
irrevocable right and option (put option) to require Telkom to acquire all
of the shares held by Kenston (25% shareholding) in Multi-Links, at any
time during the 90 day period following the second anniversary of the
effective date. On initial recognition, a liability of R661 million,
representing the higher of the transaction share price and the fair value,
was recognised under non-current other financial liabilities.
A corresponding debit was recognised in non-distributable reserves.
The put option was exercised on January 21, 2009 for R1,328 million
(US$130 million at US$1 = R10.2188). The liability was derecognised
and a corresponding credit consisting of R661 million reversal of equity
and R667 million relating to changes in the fair value of the put option
subsequent to initial recognition, was recognised directly in equity.
2007 2008 2009
Rm Rm Rm
Put option – – 1,328
Africa Online Limited (Africa Online)
On February 23, 2007 Telkom acquired a 100% shareholding of Africa
Online from African Lakes Corporation for a total cost of R150 million,
with a resulting goodwill of R145 million.
Africa Online is an internet service provider active in Cote d’Ivoire, Ghana,
Kenya, Namibia, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe.
Africa Online is incorporated in the Republic of Mauritius.
At acquisition date the company was not IFRS compliant and thus no fair
value information based on IFRS was available.
The process of calculating a fair value of the identified assets, liabilities
and contingent liabilities has been finalised.
The fair value of the assets and liabilities acquired were determined as follows:
Fair value of intangible assets (licences R1 million, brand R42 million) 43 – –
Less: Deferred taxation raised on intangible assets (12) – –
Less: Net liabilities acquired (excluding fair value of intangible assets) (26) – –
Fair value of net assets acquired 5 – –
Goodwill 145 – –
Purchase price 150 – –
The goodwill has been allocated to the various cash-generating units (’CGU’) representative of the countries in which Africa Online Limited
operates.