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314 Telkom Annual Report 2009 Notes to the annual financial statements (continued) for the three years ended March 31, 2009 34. COMMITMENTS (continued) Operating lease commitments and receivables (continued) Total 5 years Rm Rm Rm Rm 2007 Cash flow Land and buildings 371 134 236 1 Rental receivable on buildings (269) (91) (174) (4) Vehicles 564 564 – – Equipment 23 6 17 – Customer premises equipment receivable (57) (30) (27) – Total cash flow 632 583 52 (3) Income statement Land and buildings 332 128 203 1 Rental receivable on buildings (249) (90) (156) (3) Vehicles 564 564 – – Equipment 23 6 17 – Customer premises equipment receivable (57) (30) (27) – Total to be recognised in the income statement 613 578 37 (2) Operating leases The Company leases certain buildings, vehicles and equipment. The majority of the lease terms negotiated for equipment-related premises are ten years with other leases signed for five and three years. The majority of the leases normally 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 the 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 note above. Onerous leases for buildings, of which the Company 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 24. 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 airports 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.
Notes to the annual financial statements (continued) for the three years ended March 31, 2009 34. COMMITMENTS (continued) Operating leases (continued) Telkom Annual Report 2009 315 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 at a fixed fee for the entire period. Total 5 years Rm Rm Rm Rm Finance lease commitments Vehicles 2009 Minimum lease payments 187 47 140 – Finance charges (38) (15) (23) – Finance lease obligation 149 32 117 – 2008 Minimum lease payments 242 48 194 – Finance charges (59) (20) (39) – Finance lease obligation 183 28 155 – Buildings 2009 Minimum lease payments 1,652 111 545 995 Finance charges (822) (111) (426) (284) Finance lease obligation 830 – 119 711 2008 Minimum lease payments 1,778 126 502 1,150 Finance charges (936) (114) (439) (383) Finance lease obligation* 842 12 63 767 2007 Minimum lease payments 1,897 120 487 1,290 Finance charges (1,051) (116) (446) (489) Finance lease obligation 846 4 41 801 Equipment 2009 Minimum lease payments 7 5 2 – Finance charges (2) (1) (1) – Finance lease obligation 5 4 1 – *These prior year figures have been restated to include the finance lease obligation with regard to the Campus property.
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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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