Notes to the condensed consolidated provisional annual financial statements
for the year ended 31 March 2014
'Significant events
Results of the Telkom Annual General Meeting regarding Directors re-appointments
All Board members were re-elected as per the Annual general meeting ordinary resolutions with the exception of Mr J Molobela
who withdrew his nomination to be re-elected as director with effect from 27 September 2013. Mr B du Plessis
did not stand for re-election for the Board.
Suspension of Chief Financial officer
Shareholders are advised that Mr. Jacques Schindehütte, the Chief Financial Officer of Telkom SA SOC Ltd,
("Telkom") has been suspended by the Board of Directors of Telkom ("the Board") effective 24 October 2013,
pending the finalisation of a disciplinary process. The suspension follows the findings of an investigation
by an independent law firm, commissioned by the Board, following receipt of certain allegations levelled
against Mr. Schindehütte by an anonymous whistle blower. A disciplinary process was instituted against
Mr. Schindehütte, which is still ongoing.
Mr Deon Fredericks has been acting as Chief Financial Officer of Telkom with effect from 24 October 2013.
Employee Forfeitable Share Plan (Employee FSP)
A new forfeitable share plan was approved at the Annual General Meeting per Special resolution where no more than
5% of Telkom's amount of issued shares will be allocated to employees.
Post-Retirement Medical Aid curtailment
Telkom announced during August 2013 that eligible employees have the option to transfer their post-retirement
medical aid benefit to an insurer. The Company curtailed the medical cap increase to 0% as from 1 October 2013
for active members due to revenue remaining under pressure, rising operational costs and affordability. Of the 9 302
eligible employees 7 654 employees exercised their option to transfer their benefit to an insurer on 11 October 2013.
The approximate net curtailment gain recognised was R2,2 billion.
Appointment of Chief Information Officer
Telkom announced on 21 October 2013 that Mr L De Villiers has been appointed as Chief Information
Officer with effect from 1 November 2013.
Appointment of Chief Marketing Officer
Telkom announced on 15 November 2013 that Mr V Scarcella has been appointed as Chief Marketing
Officer with effect from 1 February 2014.
Appointment of Chief Procurement Officer
Telkom announced on 5 December 2013 that Mr IM Russel has been appointed as Chief Procurement Officer
with effect from 1 February 2014.
Appointment of Chief Technology Officer
Telkom announced on 15 February 2014 that Mr AN Samuels has been appointed as Chief Technology
Officer with effect from 13 February 2014.
Appointment of Chief Risk Officer
Telkom announced on 1 April 2014 that Adv GJ Rasethaba has been appointed as Chief Risk
Officer with immediate effect.
Fair Value Hedge Accounting
The Group implemented fair value hedge accounting for foreign currency risk hedging instruments
from 1 October 2013 in an attempt to mitigate earnings volatility.
MTN and Telkom Radio Access Network (RAN) assets Transaction
On 7 March 2014, Telkom announced it signed a heads of agreement with MTN South Africa to take over financial and
operational responsibility for the roll-out and operation of Telkom's RAN . The parties will conclude reciprocal roaming
agreements to enable customers of either party to roam on the network of the other party. The telecoms industry,
in both South Africa and globally, are facing an unprecedented shift from traditional voice towards data. In order to
meet this demand the parties have entered into the proposed transaction. Telkom will be able to provide its customers
with effective access to the latest state of the art networks without having to incur the significant capital expenditure
needed to achieve such national coverage. As a result of the proposed transaction, the range of services available to
customers will increase, the customer experience will be enhanced and significant scale efficiencies, beneficial to both
parties and their customers, would be realised.
The proposed transaction is subject to conclusion by the parties of various binding commercial agreements to give effect to the proposed transaction, and various other approvals, including approvals by regulatory authorities as may be required for the implementation of the proposed transaction.