Telkom AR front.qxp

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Telkom Annual Report 2009
Notes to the annual financial statements (continued)
for the three years ended March 31, 2009
37. RELATED PARTIES (continued)
Terms and conditions of transactions with related parties
The sales to and purchases from related parties of telecommunication services are made at arm’s length prices. Except as indicated above,
outstanding balances at the year end are unsecured, interest-free (except for interest charged on overdue telephone accounts) and settlement
occurs in cash. Apart from the bank guarantee to the amount not exceeding R23 million (US$3 million) provided to Africa Online Limited,
there have been no guarantees provided or received for related party receivables or payables. Except as indicated above for the year
ended March 31, 2009, the Company has not impaired any amounts owed by related parties (2008: RNil; 2007: RNil). This assessment
is undertaken each financial year through examining the financial position of the related party and the market in which the related party
operates.
38. SIGNIFICANT EVENTS
Telkom Renaissance
On November 14, 2008, Telkom’s Board of Directors approved the new organisation structure which is designed to fit Telkom’s defend
and growth strategy. The new structure is effective April 1, 2009 and is being managed through a project called Telkom Renaissance.
The Group has been restructured into three operating Business Units namely Telkom South Africa, Telkom International and Telkom Data
Centre Operations. The Telkom Renaissance initiative will occur over the next 24 months to ensure that all the necessary remodelling,
reorganising, revitalising and re-engineering happens in order to make the new structure function optimally.
This initiative is a complete transformation of the way Telkom focuses on servicing its customers and creating value for its stakeholders. It is
a positive, purposeful change towards a more accountable and competitive company. This change is a necessary part of Telkom’s strategy
to maintain and grow market share in South Africa whilst building a strong footprint on the African continent.
Capability Management
Telkom will seek to manage costs and address service delivery constraints by realigning its structure and resources to better match its
transforming information, communications and technology business.
The transformation of the communications industry and increasing market and competitive pressure has put communication companies such
as Telkom under increasing revenue and expense constraints while being required to improve customer service. As a result capability
management is designed to ensure that the capabilities needed to succeed in a converged communications market are established through
the optimal utilisation of external as well as internal capabilities, extracting efficiencies, where possible, through scale of a rapidly maturing
retail and wholesale market and better organised functional areas in a more deregulated and liberalised communications market.
Capability management includes the internal consolidation of certain functional areas and the optimisation of strategic supplier and service
provider relationships improving performance in other functional areas.
Capability Management will be concerned with assisting in addressing the margin and service delivery pressures by reassessing the
operational service delivery methodology currently deployed with a view of increasing flexibility, reducing expense while improving service
delivery across Telkom.
Given the challenges Telkom faces in rolling out broadband, converged and data services, maintaining our legacy network and expanding
our operations across the African continent, employees’ skills and performance must be aligned with our strategy to ensure financial,
operational and transformational targets, customer expectations and shareholder expectations are met.
The immediate objective therefore is to remodel service delivery. This is one of the strategic initiatives under Project Renaissance and will
focus on the following:
• Identify and assess existing capabilities;
• Establish a Telkom Capability Inventory;
• Determine future capability requirements;
• Identify and develop a set of optimal service delivery options for achieving current and future strategic objectives; and