Telkom AR front.qxp

Notes to the annual financial statements (continued)
for the three years ended March 31, 2009
5. OPERATING EXPENSES
Operating expenses comprise:
Telkom Annual Report 2009 267
2007 2008 2009
Rm Rm Rm
5.1 Employee expenses 7,077 7,386 7,990
Salaries and wages 5,076 5,519 5,742
Medical aid contributions 377 407 404
Retirement contributions 439 460 460
Post-retirement pension and retirement fund (refer to note 25) 33 5 29
Current service cost 5 5 4
Interest cost 329 509 633
Expected return on plan assets (508) (713) (825)
Actuarial gain (136) (16) –
Settlement loss/(gain) 21 (2) (3)
Asset limitation 322 222 220
Post-retirement medical aid (refer to note 25) 329 277 455
Current service cost 83 84 95
Interest cost 285 321 426
Expected return on plan asset (188) (257) (223)
Actuarial loss 149 129 157
Telephone rebates (refer to note 25) 104 27 61
Current service cost 4 3 6
Interest cost 19 22 39
Past service cost 76 2 2
Actuarial loss 5 – 14
Share-based compensation expense (refer to note 22 and 25) 141 522 554
Other benefits* 1,274 969 1,021
Employee expenses capitalised (696) (800) (736)
* Other benefits include annual leave, performance incentive,
service bonuses, skills development and workforce
reduction expenses.
5.2 Payments to other operators 6,461 6,902 7,536
Payments to other network operators consist of expenses in
respect of interconnection with other network operators.
5.3 Selling, general and administrative expenses 3,970 3,904 6,580
Selling and administrative expenses 1,329 1,108 3,428
Maintenance 1,900 1,996 2,293
Marketing 604 583 574
Bad debts (refer to note 17) 137 217 285
Included in the current year’s selling and administrative expenses, a total impairment loss of R2,178 million (2008: R229 million;
2007: RNil) has been recognised on investments.