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220 Telkom Annual Report 2009 Notes to the consolidated annual financial statements (continued) for the three years ended March 31, 2009 38. COMMITMENTS Capital commitments 2007 2008 2009 Rm Rm Rm Capital commitments authorised 11,167 15,198 7,928 Fixed-line 7,000 7,000 6,991 Mobile 4,159 5,211 – Multi-Links – 355 847 Other 8 2,632 90 Commitments against authorised capital expenditure 1,099 3,504 1,393 Fixed-line 506 652 539 Mobile 591 800 – Multi-Links – 355 847 Other 2 1,697 7 Authorised capital expenditure not yet contracted 10,068 11,694 6,535 Fixed-line 6,494 6,348 6,452 Mobile 3,568 4,411 – Multi-Links – – – Other 6 935 83 Capital commitments comprise commitments for property, plant and equipment and software included in Intangible assets. Management expects these commitments to be financed from proceeds of the Vodacom sale. 2010 FIFA World Cup commitments The FIFA World Cup commitment is an executory contract which requires Telkom to develop the fixed-line components of the necessary telecommunications infrastructure needed to broadcast this event to the world. This encompasses the provisioning of the fixed-line telecommunications related products and services and, where applicable, the services of qualified personnel necessary for the planning, management, delivery, installation and de-installation, operation, maintenance and satisfactory functioning of these products and services. Furthermore as a National Supporter. Telkom owns a tier 3 sponsorship that grants Telkom a package of advertising, promotional and marketing rights that are exercisable within the borders of South Africa. Telkom entered into a barter transaction in return for which it has an outstanding commitment to FIFA of R243 million (2008: R260 million) as at March 31, 2009. This has been recognised in intangible assets (note 12) and has been included in the disclosure note. Total 5 years Rm Rm Rm Rm Operating lease commitments and receivables 2009 Land and buildings 583 290 281 12 Rental receivable on buildings (271) (99) (170) (2) Vehicles 1,137 261 876 – Equipment 15 6 9 – Customer premises equipment receivables (87) (48) (39) – Total 1,377 410 957 10
38. COMMITMENTS (continued) Operating lease commitments and receivables (continued) Telkom Annual Report 2009 221 Notes to the consolidated annual financial statements (continued) for the three years ended March 31, 2009 Total 5 years Rm Rm Rm Rm 2008 Land and buildings 2,061 341 913 807 Rental receivable on buildings (266) (94) (169) (3) Transmission and data lines 709 134 490 85 Vehicles 1,444 233 1,211 – Equipment 13 10 3 – Sport and marketing contracts 680 282 395 3 Customer premises equipment receivables (84) (45) (39) – Total 4,557 861 2,804 892 2007 Land and buildings 1,465 289 771 405 Rental receivable on buildings (269) (91) (174) (4) Transmission and data lines 262 68 159 35 Vehicles 573 568 5 – Equipment 23 6 17 – Sport and marketing contracts 441 164 275 2 Customer premises equipment receivables (57) (30) (27) – Total 2,438 974 1,026 438 Customer premises equipment receivable The disclosed information relates to those arrangements which were assessed to be operating leases in terms of IAS17. Operating leases The Group leases certain buildings, vehicles and equipment. The majority of the lease terms negotiated for equipment-related premises are 10 years with other leases signed for five and three years. The majority of the leases contain an option clause entitling Telkom to renew the lease agreements for a period usually equal to the main lease term. The minimum lease payments under these agreements are subject to annual escalations, which range from 6% to 15%. Penalties in terms of the lease agreements are only payable should Telkom vacate a premises and negotiate to terminate the lease agreement prior to the expiry date, in which case the settlement payment will be negotiated in accordance with the market conditions of the premises. Future minimum lease payments under operating leases are included in the above note. Onerous leases for buildings, of which Telkom has no further use, no possibility of sub-lease and no option to cancel, are provided for in full and included in other provisions (refer to note 29). The master lease agreement for vehicles was for a period of five years and then extended for an additional three years which resulted in the lease expiring on March 31, 2008. During August 2007 new terms were negotiated and approved and as a result the operating lease commitments for vehicles are based on the new agreement which expires on March 31, 2013. In accordance with this agreement Telkom is not allowed to lease any similar vehicle as specified in the contract from any other service provider during the five year period except for the rentals at airport which are utilised in cases of subsistence and travel as well as vehicles which are not part of the agreement. The agreement is structured to have no lease increases on vehicles that are continually leased from the lessor. If a vehicle is, however, replaced by a new similar vehicle, the lease costs of the newest vehicle will increase by the Consumer Price Index. All leased vehicles are, however, subject to any variance in the interest rate fluctuations and are adjusted as and when the adjustments are announced by the South African Reserve Bank. The leases of individual vehicles are renewed annually. The master lease agreements for office equipment are with two suppliers with initial periods of 36 months effective from November 25, 2005. Upon expiry of the initial lease agreement on November 25, 2008, an extension of the lease was negotiated until November 24, 2009. In terms of these agreements the leases of individual equipment shall be valid for 36 months at a fixed fee for the entire period.
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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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346 VOTING AND PROXIES Ordinary sha
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Notes Telkom Annual Report 2009 1.
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