Sustainability Review

As one of South Africa’s largest corporations, Telkom’s public visibility is enormous

As one of South Africa’s largest corporations, Telkom’s public visibility is enormous. Our activities impact on the lives of every South African in one way or another and so our sustainability must be beyond reproach.

As the draft King Report III notes: “Although a company is an economic institution, it remains a corporate citizen and therefore has to balance economic, social and environmental value. The triple bottom line approach enhances the potential of a company to create economic value…”

Telkom has long subscribed to this philosophy and sustainability is a key driver of our business strategy. It is a business opportunity for us, an opportunity we pursue with relentless vigour in all our operations.

Last year we reported that we continue to focus on the transformation of our business and, to this end, in the latter part of the year under review we embarked on a focused internal transformation programme, Telkom Renaissance, a programme geared to ensuring that we become Africa’s leading ICT service provider. It is, at least, a two year initiative during which time the Company will completely renew itself in terms of markets, processes, skills, capabilities and a new behaviour. Our goal is to create a high performance company that is capable of executing our ‘defend and grow’ strategy; a company that is characterised by profitability, sustainability and an ability to realise its vision; a company that is customer-focused with leading edge value solutions, and where the creation of value through excellence is the norm and not the exception.

To date, we have distinguished ourselves as an entity that subscribes to the values of good corporate governance but, we can do better. We can, like the Renaissance Period of the 14th to 16th centuries that our initiative is named after, expand our vision beyond the conventional and traditional, and sustainability is a key focus area in this regard.

Stakeholder engagement

The modern corporation must meet the expectations of a diverse range of stakeholders and, as such, the management of stakeholder relationships is not a nice to have but a critical must.

Throughout the year we refined our stakeholder management policy to ensure systematic engagements with:

• Employees
• Customers
• Investors
• Government
• Regulators
• Media
• Suppliers
• Unions
• Civil society

As a result, we achieved:

Employees: A significant improvement in levels of employee engagement over the last three years via briefing sessions, training initiatives and electronic and print communication. In the year under review there was an on-going refinement in promoting a culture of engagement and internal communication channels. Greater prominence was given to face-to-face communication, especially between top leaders and the next management level, as well as electronic communication from the CEO across the company.

Customers: Through our Customer Centricity project we have seen improvements in customer call centre operations; our ability to keep our promises and the reaction time in identifying and dealing with complaints.

Investors: An improvement in sharing with them our strategic plans, operational performance and financial results through one-on-one briefings; daily consultations; roadshows and the Investor Relations website.

Government: A substantial improvement in our relations with national government as a result of extensive consultations in which emerging issues were pre-empted and promptly dealt with. In addition, 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 well received. Our success in engaging with government is evident in the irrevocable support provided by government which resulted in the successful conclusion of the Vodacom transaction.

Regulators: Regular submissions on new regulations and responses to enquiries to, in particular, the Independent Communications Authority of South Africa (ICASA) and total compliance, where technically possible, with all the regulatory requirements in our operational areas.

Media: Media management was conducted in a structured manner guided by three focus areas: reactive engagement, proactive engagement and relationship building.

Suppliers: The top company award in the 2008 Empowerdex Preferential Procurement on overall spend survey.

Unions: We continued to engage 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.

Civil society: Traditionally, telecommunications companies and utilities are at the bottom of global reputation studies as they face an uphill battle to communicate with the public. As a result of this, we embarked on a reputation study in May 2008 to measure and analyse attitudes and perceptions about us amongst various stakeholder groups. In the year under review approximately 3,700 interviews were conducted. It was gratifying to note that our reputation improved significantly, albeit from a low base. There was increased recognition in our key areas of products/service; leadership and governance and a significant improvement in the perceptions of our corporate social investment programme.

Going forward

In the 2009/10 financial year we will focus on developing unambiguous stakeholder value statements that detail our promises to our stakeholders and, equally importantly, internal scorecards for us to check how we live up to those promises.

Group communication and brand

Group communication and brand was with a renewed sense of purpose infused

Group communication and brand was infused with a renewed sense of purpose following the appointment of one of South Africa’s leading communications experts, Brenda Kali, as Group Executive responsible for this function.

Guided by the decision to integrate and align communication processes and practices with Telkom’s brand position and values system to ensure greater credibility amongst our stakeholders, we focused on two specifics – the management of stakeholder relationships and reputation, and brand and image management.

Interfacing with the media

While the media is an influential stakeholder in its own right, it is also a vehicle through which we can communicate to our broader stakeholder base. To this end, a dedicated media unit was established to ensure we sent out a consistent message to enhance our reputation and create greater brand awareness.

On the reactive front, the vast scope of our activities ensured a very high level of media interest in the year under review. Media enquiries ranged from our growth and expansion plans to cable theft, the provision of broadband, regulatory issues, the evolution of the network, our financial results, service delivery, customer complaints and corporate governance.

As a result of our commitment to providing accurate and strategic information to the media, our reputation took a turn for the better.

During the year under review, the value of proactive media engagement was underscored in three areas – the 2010 Soccer World Cup; the sale of our shares in Vodacom and the strategic agreement with AT&T.

2010 World Cup

As FIFA’s main partner in the development of fixed-line network infrastructure, we are responsible for providing infrastructure and communication services. Our capabilities in this regard were highlighted through media site visits and face-to-face interviews with the key people in our 2010 project office.

The Vodacom transaction

Throughout the transaction process from November 2008 to June 2009, journalists were given as much access as they requested to our key top management team.

The AT&T agreement

At the announcement of the strategic memorandum of understanding, journalists had the opportunity to spend time with the role players from both companies.

We pride ourselves not only on building strong relationships between the media and our management team, but also on enhancing the media’s knowledge of the IT industry as a whole. In the year under review we hosted a number of well attended functions, including inviting key media to the Southern African Telecommunication and Applications conference.

Connecting with our employees

In addition to refining our internal communication channels, we provided effective and timeous communication to all employees on the progress of our transformation programme, Telkom Renaissance. The programme’s specific communication was given a highlighted visual appearance to distinguish it from other electronic communications and to emphasise the status of each message. Weekly messages containing detailed information on the project’s progress were issued and a tailor-made web site was set up to enable employees to ask questions, make suggestions and receive feedback.

As the torch bearer of the programme, the CEO was highly active in all internal communications via our Skytrain interactive satellite-based network; our digital media services and ‘from the desk of the CEO’ e-mails.

On a more generic level, a number of initiatives were launched during the reporting period, for example a crossfunctional editorial committee for our Online print channel; the opening of a weekly E-news channel and an e-mail based desktop broadcast system.

We also put together a number of face-toface sessions at top and senior management level where the Group’s strategy and business approach was debated.

Partnering with Human Resources

Group communication and brand played a pivotal role in communicating Human Resource initiatives to employees. These ranged from changes in employee benefits to the Renaissance programme. Where necessary, the communications function was supplemented by event management.

Brand and image management

In our view, the brand concept is much more than just logos and products. It also promises an experience and a relationship. As a result, in the year under review, the full spectrum of brand activities was incorporated into the communication function.

Our brand has matured since Telkom was formed in 1991 and, as a result, a process was initiated during the year to rebuild it and create a fresh, innovative look and feel to give us a more modern, vibrant and customer-focused brand.

To support this, a new Vision, Mission and Value (VMV) statement, together with a VMV-wired concept, was developed to ensure that our employees wholeheartedly embrace and accept the brand and, in the process, deliver the brand promise to our customers.

2010 Soccer World Cup sponsorship

To reinforce the visibility of our involvement with the World Cup, two giant footballs are being erected on two prominent Johannesburg and Pretoria landmarks – the Hillbrow and Lukasrand towers. As a further reminder of our commitment and expertise, a number of TV commercials were produced and broadcast.