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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.
36. ACQUISITION AND DISPOSALS OF SUBSIDIARIES, JOINT VENTURES AND MINORITY INTERESTS (continued) 36.1 Acquisitions (continued) By the Group’s subsidiaries Multi-Links Telecommunications Limited (’Multi-Links Telecommunications’) (75%) On May 1, 2007 Telkom acquired a 75% shareholding in Multi-Links Telecommunications through Telkom International, a wholly owned South African subsidiary, for a total cost of R1,985 million. Multi-Links Telecommunications is a Nigerian Private Telecommunications Operator with a Unified Access Licence providing fixed, mobile, data, long distance and international telecommunications services throughout Nigeria. Multi-Links is domiciled and incorporated in Nigeria. The purchase price allocation was completed during the 2008 financial year, and has resulted in goodwill being adjusted. The following intangible assets were identified and valued at the end of the year: Telkom Annual Report 2009 217 Notes to the consolidated annual financial statements (continued) for the three years ended March 31, 2009 2007 2008 2009 Rm Rm Rm Customer relationship – 61 – Licence – 36 – Brand – 105 – Fair value of intangible assets – 202 – The fair value of the assets and liabilities acquired were determined as follows: Net assets acquired (excluding fair value of intangible assets) – 236 – Fair value of intangible assets – 202 – Less: Contingencies recognised – (35) – Less: Deferred taxation raised on intangible assets – (65) – Fair value of net assets acquired – 338 – Less: Minority interest – (80) – Goodwill – 1,727 – Purchase price* – 1,985 – * The purchase price was settled in cash. Disposal group By the Group’s 50% joint venture, Vodacom Storage Technology Services (Proprietary) Limited – – 69 Gateway – – 2,846 Smartphone SP (Proprietary) Limited and subsidiaries 168 468 – Smartcom (Proprietary) Limited 4 9 – Africell Cellular Services (Proprietary) Limited 40 – – InterConnect s.p.r.l 10 – – Cointel VAS (Proprietary) Limited 73 – – Disposals By the Group’s 50% joint venture, Vodacom Ithuba Smartcall (Proprietary) Limited – – – Stand 13 Eastwood Road Dunkeld (Proprietary) Limited – 8 –
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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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146 Telkom Annual Report 2009 Notes
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346 VOTING AND PROXIES Ordinary sha
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Notes Telkom Annual Report 2009 1.
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