Sustainability Review

“There was a significant improvement in our reputation among all stakeholder groups”

Stakeholder engagement

During the period under review we enhanced our focus on three strategic imperatives:

• Engaging in authentic dialogue and transparent communications with our stakeholders;
• Conveying a clear narrative about our strategic intent and our leadership team; and
• Enhancing our corporate reputation.

Employee engagement

We continued to promote a culture of engagement among all employees through our internal communications campaign. In addition to electronic communications from our CEO, he also toured the country and our African operations to share key insights and address any concerns raised.

We also launched Channel T, an on-line audio visual streaming system transmitted by our Digital Media Services (DMS) directly to all desktops. The system enables employees to participate in live discussions.

As a strong believer in face-to-face communication, we set up a number of sessions with senior management who used the opportunity to expand on our strategy and transformation objectives.

Customers

We continued to see improvements in customer call centre operations; our ability to keep our promises and the reaction time in identifying and dealing with complaints. In our pilot project associated with the EBITDA improvement project we improved average handling times by 25%.

Investors

Our Investor Relations team shared our strategic plans, operational performance and financial results with investors through briefings, roadshows, emails and the Investor Relations website.

Government

Our support for the government's Programme of Action, especially in the areas of economic growth, infrastructure development and the provision of telecommunications for public schools, was again well received.

Regulators

We make regular submissions on new regulations and responses to enquiries from the Independent Communications Authority of South Africa (ICASA) in particular, and comply with Johannesburg Stock Exchange rules and regulations and, where technically possible, with all the regulatory requirements in our operational areas.

Media interface

Given the vast scope of our operations and significant corporate action, there were high levels of media interest during the year. We pride ourselves on rapidly processing media questions and on giving journalists accurate and concise information. Additionally, all customer complaints that came via the media received high-level attention.

To ensure a greater familiarity between journalists and our leadership team, we invited the media to attend major ICT events such as the Southern Africa Telecommunication Networks and Applications conference and the Highway Africa conference and we set up formal and informal meetings between journalists and management.

We continued to forge and consolidate strategic partnerships during the year and, in particular, to mark milestone days in the countdown to the FIFA World Cup™. One such example was our partnership with radio station Kaya FM which broadcast a day long live broadcast from our newly branded tower in Hillbrow, Johannesburg.

The year also gave us the opportunity to showcase the technology we deployed in response to FIFA's information technology and telecommunications specifications. One specific event was a tour by journalists of the landing point in KwaZulu-Natal of our East African Submarine cable system, a key link in our undersea infrastructure which was used by the international media to broadcast their signals to soccer fans around the world.

Suppliers

Telkom was the recipient of the top company award in the 2008 Empowerdex Preferential Procurement on overall spend survey and has continued to focus on our commitment in this regard.

Unions

We again engaged with the unions through:

• the Restructuring Forum, a purely consultative body where we share information with union leaders;
• The Company Forum, the only decision-making structure on issues that require negotiations;
• The National Employment Equity and Skills Development Forum; and
• Task Teams which consist of both management and union representatives and which deal with specific issues.

Telkom reputation measurement and tracking 2009/10

Reputation is a reflection of a company's culture and identity, "the result of what you do, what you say and what other people say about you".

In May 2008 we embarked on a reputation study to measure, track and analyse the attitudes and perceptions among key stakeholder groups from government to shareholders, the financial community, customers, suppliers and employees. To date, approximately 5,000 interviews have been conducted.

Our continuous efforts to build reputation capital are being rewarded by improvements in our overall reputation measurement scores and our future success is founded on our biggest strategic asset, our corporate reputation. To this end, continuing to build stakeholder trust, admiration and respect for the Group underpins everything we do.

Our public visibility and reputation is enormous and to keep track of our reputation among all our stakeholders we make use of the Reputation Industry's proprietary RepTrak™ Pulse model. This measures the overall assessment of the health of a company's reputation.

The model measures seven reputation dimensions which impact on a company's reputation. These are: Leadership (quality of management and leadership); Performance (financial and growth opportunities); Products/ Services (their quality); Innovation (technological advancement and innovation); Workplace (employment preference and employee well-being); Governance (corporate governance in terms of ethics, openness and transparency), and Citizenship (social/environmental responsibility).

In the year under review, there was a significant improvement in our reputation among all stakeholder groups – external; key influencers; overall customers and employees. Our RepTrak™ score improved from 36.3 in March 2009 to 40.3 in March 2010, with the highest scoring dimension being Citizenship, with specific reference to our corporate social investment programmes and our commitment to protecting the environment.

For the duration of the tracking study, three reputation dimensions consistently remained perception drivers of the Group – Products/Services; Leadership and Governance. We were encouraged to find that the perceptions of our products and services and our commitment to meeting customer needs improved significantly and our Leadership and Governance scores are improving.

Given that the study showed that stakeholders are more motivated by our ability to innovate new products and services, meet customer needs and offer them value for money, these will remain a priority in our quest to achieve our strategic imperatives and overall vision.

We conduct annual interviews with our corporate and global customers to measure customer loyalty and perceptions of service quality. Between 12 October and 16 November 2009, 350 customers were interviewed and the results were heartening. A significant number indicated they would be likely to recommend us to others; would make use of additional services and that they would continue to use us as their preferred service provider. Equally importantly they said that, compared to 2008/09, they would be less likely to search for an alternative communications provider.

This improvement in loyalty levels is supported by a general trend of improved satisfaction levels across measured aspects. Most importantly, perceptions about the overall quality of our services rose from 43% of customers who rated us as either excellent or very good in 2008/09 to 55% in 2009/10.

Customer perceptions about our technical support, products and services, our overall communications with them and their perceptions of our service managers, all improved significantly.

When evaluating specific reputation results of global industries, it is interesting to note that some have a positive halo and others a negative one. The telecommunications industry falls into the latter category but, compared to the 2008 results, the industry improved its global industry mean by 4.15 points in 2009, which indicates an improvement in the general public's perception of the industry. For us, this presents an interesting opportunity to improve perceptions of companies like us in South Africa.

Repositioning the brand

A comprehensive process to reposition our brand took place in the period under review. The process was twofold – to inject energy into a mature brand and to align employee thinking in support of our strategic direction.

As part of the process we initiated a Brand Champions programme to help us build pride in our brand from the inside. It focused on recruiting and equipping selected employees with the necessary information and skills to bring the brand to life across the business.

Based on customer feedback we developed a new brand for our Data Centre Operations – Cybernest – and are about to launch a Pan-African Internet Service Provider called iWayAfrica through the merger of two of our subsidiaries, Africa Online and MWEB Africa.

To reinforce our involvement with the FIFA World Cup™ we mounted two giant footballs on our Pretoria and Johannesburg towers and we continued to support local soccer through the Telkom Charity Cup and the Telkom Knockout, two major Premier Soccer League (PSL) events.