The Telkom Group believes that normalised earnings more accurately reflect the Group's operational performance.
Unless otherwise indicated, the discussion below is based on normalised results, excluding the items below, and is based on continuing operations.
The statement of comprehensive income for the six months ended 30 September 2010 has been adjusted to remove the effects of the impact of the Soccer World Cup contract entered into with the Department of Communications, the amortisation of the FIFA brand intangible asset, the impairment of the net asset value of Multi-Links, and fair value gain on the Vodacom shares held.
The statement of comprehensive income for the six months ended 30 September 2009 has been adjusted to remove the effects of the sale and unbundling of our 50% share in Vodacom, the profit on sale of Telkom Media, the impairment of Multi-Links, the impact of the Soccer World Cup contract entered into with the Department of Communications and the amortisation of the FIFA brand intangible asset to enable year on year comparison.
The impact of the items discussed above on Group earnings as reported is as follows:
Continuing operations |
Restated September 2009 |
Effects of Vodacom transaction |
Other unusual items |
Normalised September 2009 |
Reported September 2010 |
Other unusual items |
Normalised September 2010 |
Variance % |
---|---|---|---|---|---|---|---|---|
Operating revenue | 18,761 | (6)(153) | 18,608 | 17,667 | (6)(63) | 17,604 | (5.4) | |
Other income | 18,814 | (18,535)(1) | (68)(7) | 211 | 184 | - | 184 | (12.8) |
Operating expenses | 19,418 | (946) | (2,341) | 16,131 | 15,417 | (304) | 15,113 | 6.3 |
Employee expenses | 5,359 | (946)(2) | - | 4,413 | 4,853 | 4,853 | (10.0) | |
Payments to other operators | 4,284 | - | - | 4,284 | 3,057 | 3,057 | 28.6 | |
Selling, general and administrative expenses | 3,335 | - | (153)(6) | 3,182 | 2,911 | (63)(6) | 2,848 | 10.5 |
Service fees | 1,340 | - | - | 1,340 | 1,411 | 1,411 | (5.3) | |
Operating leases | 474 | - | - | 474 | 526 | 526 | (11.0) | |
Depreciation, amortisation, impairment and write-offs | 4,626 | - | (2,188)(8) | 2,438 | 2,659 | (241)(10) | 2,418 | 0.8 |
Results from operating activities | 18,157 | (17,589) | 2,120 | 2,688 | 2,434 | 241 | 2,675 | (0.5) |
Investment income | 280 | - | - | 280 | 133 | 133 | (52.5) | |
Gain on distribution of asset | 25,688 | (25,688)(3) | - | - | - | - | - | |
Finance charges and fair value movements | 794 | (166) | - | 628 | 659 | 25 | 684 | (8.9) |
Interest | 749 | - | - | 749 | 514 | 514 | 31.4 | |
Foreign exchange and fair value movement | 45 | (166)(4) | - | (121) | 145 | 25(4) | 170 | 240.5 |
Profit before taxation | 43,331 | (43,111) | 2,120 | 2,340 | 1,908 | 216 | 2,124 | (9.2) |
Taxation | 3,700 | (2,751)(5) | (135)(9) | 814 | 830 | (90)(9) | 740 | 9.1 |
Profit from continuing operations | 39,631 | (40,360) | 2,255 | 1,526 | 1,078 | 306 | 1,384 | (9.3) |
EBITDA | 5,126 | 5,093 | (0.6) | |||||
EBITDA margin (%) | 27.5 | 28.9 | 5.1 | |||||
Basic earnings per share- continuing operations | 7,860.9 | 279.0 | 198.6 | 260.2 | (6.8) | |||
Headline earnings per share- continuing operations | (160.2) | 280.6 | 243.5 | 265.7 | (5.3) | |||
Rand/Naira exchange rate | ||||||||
Closing rate at beginning of the year | N15.56 | N19.60 | 26.0 | |||||
Closing rate at end of the period | N19.60 | N22.17 | 13.1 | |||||
Period average rate (Source: Reuters) | N18.63 | N20.35 | 9.2 | |||||
(1) Profit on disposal of our 15% share of Vodacom. | ||||||||
(2) Compensation expense recognised in terms of IFRS2 relating to the amendment of the Telkom Conditional Share Plan. | ||||||||
(3) Gain on distribution of our 35% share in Vodacom. | ||||||||
(4) Fair value (loss)/gain on the Vodacom shares held. | ||||||||
(5) Includes R1,353 million capital gains taxation on the sale of Vodacom, R977 million secondary taxation on companies on the R19 special dividend and R421 million reversal of the deferred tax asset raised. | ||||||||
(6) Revenue and expenses recognised on the contract entered into with the Department of Communications for the Soccer World Cup. | ||||||||
(7) Profit on sale of Telkom Media. | ||||||||
(8) Includes R2,148 million impairment of Multi-Links goodwill and R40 million amortisation of the FIFA brand intangible asset. | ||||||||
(9) Secondary taxation on the special dividend. | ||||||||
(10) Includes R201 |
for the six months ended 30 September |
|||
---|---|---|---|
In ZAR millions |
2009 |
2010 |
% |
Telkom South Africa | 16,854 | 15,905 | (5.6) |
Multi-Links | 818 | 744 | (9.0) |
Other International | 234 | 222 | (5.1) |
iWayAfrica | 234 | 222 | (5.1) |
Other South African | 733 | 1,356 | 85.0 |
Trudon | 638 | 647 | 1.4 |
Swiftnet | 54 | 61 | 13.0 |
Data Centre Operations | 19 | 614 | - |
Corporate centre | 22 | 34 | 54.5 |
Eliminations | (31) | (623) | - |
Total | 18,608 | 17,604 | (5.4) |
Group operating revenue decreased by 5.4% to R17,604 million (30 September 2009: R18,608 million) in the six months ended 30 September 2010. The decrease is mainly due to the 100% pass through to customers of the reduction in mobile termination rates, lower switched hubbing volumes and a decline in Multi-Links's voice revenue as a result of lower voice traffic volumes and higher churn. Data Centre Operations includes R577 million of revenue from Telkom SA in terms of the transfer pricing policy effective from 1 April 2010. This revenue is eliminated on consolidation.
for the six months ended 30 September |
|||
---|---|---|---|
In ZAR millions |
2009 |
2010 |
% |
Subscriptions and connections | 6,814 | 6,763 | (0.7) |
Traffic | 7,126 | 6,032 | (15.4) |
Local | 1,637 | 1,461 | (10.8) |
Long distance | 923 | 809 | (12.4) |
Fixed-to-mobile | 3,347 | 2,543 | (24.0) |
Fixed-to-fixed | 15 | 34 | 126.7 |
International outgoing | 472 | 378 | (19.9) |
Subscription based calling plans | 732 | 807 | 10.2 |
Interconnection | 1,458 | 912 | (37.4) |
Mobile | 604 | 356 | (41.1) |
Fixed | 96 | 210 | 118.8 |
International | 758 | 346 | (54.4) |
Data | 4,830 | 5,550 | 14.9 |
Leased lines and other | 3,847 | 4,434 | 15.3 |
Mobile leased facilities | 983 | 1,116 | 13.5 |
Other | 96 | 111 | 15.6 |
Total | 16,854 | 15,905 | (5.6) |
Operating revenue from the Telkom South Africa segment decreased by 5.6% to R15,905 million (30 September 2009: R16,854 million) primarily due to lower fixed-to-mobile traffic revenue and lower international and mobile interconnection revenue, partially offset by growth in data revenues.
Subscription and connections revenue decreased by 1.3% to R3,300 million (30 September 2009: R3,344 million) largely as a result of a decrease in the number of postpaid and prepaid access lines.
Traffic revenue decreased by 15.4% mainly due to a reduction in mobile termination rates and lower fixed-to-mobile volumes due to the increasing substitution of calls placed using mobile services rather than fixed-line services. This was partially offset by an increase in revenue from subscription based calling plans by 10.2% to R807 million primarily due to increased volumes as a result of a 17.0% increase in the number of subscribers to 762,070 (30 September 2009: 651,359).
Interconnection revenue decreased by 37.4% to R912 million (30 September 2009: R1,458 million) largely as a result of a decrease of 54.4% in international interconnection revenue and a 41.1% decrease in mobile interconnection revenue. International interconnection revenue decreased primarily due to lower volumes on switched hubbing. The decrease in mobile interconnection revenue is mainly as a result of the decrease in mobile termination rates. Fixed interconnection revenue increased mainly due to increased volumes from Neotel and VANS.
Data revenue increased 14.9% to R5,550 million (30 September 2009: R4,830 million) mainly due to revenue generated by the Soccer World Cup, a growing demand for services, including ADSL, a 13.5% increase in revenue from leased line facilities to mobile operators, growth in managed data network services and an increase in internet access and related services.
for the six months ended 30 September |
|||
---|---|---|---|
In Naira millions |
2009 |
2010 |
% |
Subscriptions and connections | 263 | 409 | 55.5 |
Traffic | 8,745 | 6,590 | (24.6) |
Interconnection | 3,499 | 5,013 | 43.3 |
Data | 1,200 | 1,910 | 59.2 |
Directories and other | - | 14 | - |
Total | 15,325 | 15,065 | (1.7) |
Multi-Links operating revenue decreased by 1.7% to 15,065 million Naira (30 September 2009: 15,325 million Naira).
Subscriptions and connections revenue decreased 18.2% due to the termination of access fees as a result of increased competition. Traffic revenue decreased 24.6% mainly due to a decrease in traffic volumes and higher churn rates during the period under review.
Interconnection revenue increased 43.3% due to the introduction of hubbing revenue through a new line of business, namely International Carrier Services.
Multi-Links' increased focus on data services resulted in a 59.2% increase in data revenue mainly due to an increase in equivalent 2 megabit circuit services and the expansion of mobile broadband (EVDO) services.
for the six months ended 30 September |
|||
---|---|---|---|
In ZAR millions |
2009 |
2010 |
% |
Telkom South Africa | 162 | 155 | (4.3) |
Multi-Links | 2 | 2 | - |
Other International | - | 22 | - |
iWayAfrica | - | 9 | - |
Telkom International | - | 13 | - |
Other South African | 213 | 64 | (70.0) |
Trudon | 27 | 19 | (29.6) |
Swiftnet | 3 | 2 | (33.3) |
Corporate centre | 183 | 43 | (76.5) |
Eliminations | (166) | (59) | (64.5) |
Total | 211 | 184 | (12.8) |
Other income includes profit on the disposal of investments, property, plant and equipment and intangible assets as well as interest received from debtors and on loans to subsidiaries. Interest received from subsidiaries was significantly lower for the six months ended 30 September 2010 due to the impairment of the Multi-Links loans as well as part of the Multi-Links loan being interest free from 30 September 2009 onwards. Interest received from subsidiaries is eliminated on consolidation. The decrease in other income after elimination is as a result of lower interest received from debtors due to the lowering of the interest rate charged.
for the six months ended 30 September |
|||
---|---|---|---|
In ZAR millions |
2009 |
2010 |
% |
Employee expenses | 4,413 | 4,853 | (10.0) |
Payments to other operators | 4,284 | 3,057 | 28.6 |
Selling, general and administrative expenses | 3,182 | 2,848 | 10.5 |
Service fees | 1,340 | 1,411 | (5.3) |
Operating leases | 474 | 526 | (11.0) |
Depreciation, amortisation, impairments and write-offs | 2,438 | 2,418 | 0.8 |
Total | 16,131 | 15,113 | 6.3 |
Group operating expenses decreased by 6.3% to R15,113 million (30 September 2009: R16,131 million) in the six months ended 30 September 2010, primarily due to a decrease in payments to other operators partially offset by an increase in employee expenses. The decrease in payments to other operators is mainly due to the reduction in mobile termination rates and lower international switched hubbing volumes in Telkom South Africa. The increase in employee expenses is due to the increase in salaries and wages in Telkom South Africa as a result of the 7.5% annual salary increase negotiated with the unions and workforce reduction expenses of R144 million incurred. Lower selling, general and administrative expenses are mainly attributable to lower inventory write offs in the corporate centre. Operating leases increased largely as a result of Multi-Links's increased utilisation of leased cell sites.
for the six months ended 30 September |
|||
---|---|---|---|
In ZAR millions |
2009 |
2010 |
% |
Telkom South Africa | 12,591 | 12,411 | 1.4 |
Multi-Links | 1,191 | 1,008 | 15.4 |
Other International | 275 | 308 | (12.0) |
iWayAfrica | 238 | 276 | (16.0) |
Telkom International | 33 | 17 | 48.5 |
Telkom Management Services | 4 | 15 | (275.0) |
Other South African | 2,119 | 2,042 | 3.6 |
Trudon | 350 | 379 | (8.3) |
Swiftnet | 55 | 56 | (1.8) |
Data Centre Operations | 480 | 516 | (7.5) |
Corporate centre | 1,234 | 1,091 | 11.6 |
Eliminations | (45) | (656) | - |
Total | 16,131 | 15,113 | 6.3 |
The 6.3% decrease in group operating expenses was primarily driven by a decrease in Telkom SA's payments to other operators resulting from the decrease in mobile termination rates, the decrease in Multi-Links's depreciation as a result of the impairment of assets in March 2010 and lower inventory write downs in Corporate centre.
for the six months ended 30 September |
|||
---|---|---|---|
In ZAR millions |
2009 |
2010 |
% |
Employee expenses | 3,550 | 3,851 | (8.5) |
Salaries and wages | 2,846 | 2,958 | (3.9) |
Benefits | 987 | 990 | (0.3) |
Workforce reduction expenses | - | 103 | - |
Employee related expenses capitalised | (283) | (200) | 29.3 |
Payments to other network operators | 3,929 | 2,659 | 32.3 |
Payment to mobile operators | 2,524 | 1,848 | 26.8 |
Payment to international operators | 1,273 | 574 | (79.5) |
Payment to fixed-line operators | 132 | 237 | (1.8) |
Selling, general and administrative expenses | 1,771 | 1,713 | 3.3 |
Materials and maintenance | 1,033 | 939 | 9.1 |
Marketing | 120 | 138 | (15.0) |
Bad debts | 145 | 255 | (75.9) |
Other | 473 | 381 | 19.5 |
Service fees | 1,085 | 1,646 | (51.7) |
Property management | 624 | 667 | (6.9) |
Consultants and security | 461 | 979 | (112.4) |
Operating leases | 316 | 327 | (3.5) |
Depreciation, amortisation, impairments and write-offs | 1,940 | 2,010 | (3.6) |
Depreciation | 1,687 | 1,700 | (0.8) |
Amortisation | 231 | 260 | (12.6) |
Impairments and write-offs | 22 | 50 | (127.3) |
Total | 12,591 | 12,206 | 3.1 |
Telkom South Africa's operating expenses, excluding mobile expenditure, decreased by 3.1% in the six months ended 30 September 2010, to R12,206 million (2009: R12,591 million), primarily due to lower payments to international operators as a result of lower volumes on switched hubbing and lower payments to mobile operators due to the reduction in mobile termination rates, partially offset by higher consultants and security costs.
Employee expenses increased by 8.5% in the six months ended 30 September 2010, primarily due to higher salaries and wages as a result of average annual salary increases of 7.5% as agreed with the unions as well as workforce reduction expenses of R103 million incurred for management employees, partially offset by lower headcount.
Payments to international network operators decreased 54.9% due to lower volumes on switched hubbing and mobile international traffic. Payments to mobile operators decreased 26.8%, largely due to a 28.8% reduction in mobile termination rates with effect from 1 March 2010. The decrease in mobile termination rates contributed to a R640 million decrease in fixed-to-mobile revenue and a R616 million decrease in payments to mobile operators.
Selling, general and administrative expenses decreased by 3.3% primarily as a result of lower materials and maintenance resulting from cost saving initiatives, lower provision for licence fees due to lower gross profit partially offset by higher bad debt.
Service fees increased by 51.7% primarily due to a R517 million intercompany charge by Cybernest for services performed as the transfer pricing policy was introduced on 1 April 2010. This cost is eliminated on consolidation. Higher property management fees as a result of electricity increases also contributed to the increase.
for the six months ended 30 September |
|||
---|---|---|---|
In ZAR millions |
2009 |
2010 |
% |
Employee expenses | - | 49 | - |
Payments to other network operators | - | - | - |
Selling, general and administrative expenses | - | 117 | - |
Service fees | - | 37 | - |
Operating leases | - | 2 | - |
Depreciation, amortisation, impairments and write-offs | - | - | - |
Total | - | 205 | - |
8ta employed 180 employees at 30 September 2010. Selling, general and administrative expenses relate mostly to network maintenance and marketing expenses in preparation for the launch. Service fees relate to consultants assisting with the implementation of the business plan.
for the six months ended 30 September |
|||
---|---|---|---|
In Naira millions |
2009 |
2010 |
% |
Employee expenses | 1,138 | 1,106 | 2.8 |
Payments to other network operators | 5,131 | 5,135 | (0.1) |
Selling, general and administrative expenses | 9,718 | 9,314 | 4.2 |
Service fees | 169 | 369 | (118.3) |
Operating leases | 2,290 | 3,184 | (39.0) |
Depreciation, amortisation, impairments and write-offs | 3,855 | 1,250 | 67.6 |
Total | 22,301 | 20,358 | (8.7) |
Employee expenses decreased by 2.8% in the six months ended 30 September 2010, primarily as a result of the headcount optimisation programme.
Payments to other operators increased 0.1% mainly due to the increase of 1.8 billion Naira in hubbing expenses. This was offset by a decrease of 1.7 billion Naira in interconnection charges which arose as a result of a decline in off-net traffic and the introduction of the new NCC regulatory interconnection regime.
Selling, general and administrative expenses decreased 4.2% as a result of lower inventory write downs partially offset by higher bad debt. Handset subsidies totalled 2,867 million Naira and is included in selling, general and administrative expense.
Service fees increased significantly mainly due to the use of consultants for short term projects rather than appointing permanent staff.
Operating leases increased 39.0% as a result of increased utilisation of leased infrastructure, specifically relating to cell sites rental to support sales and marketing strategy.
Depreciation, amortisation, impairments and write-offs decreased significantly as a result of the impairment of Multi- Links assets on 31 March 2010.
for the six months ended 30 September |
|||
---|---|---|---|
In ZAR millions | 2009 |
2010 |
% |
Telkom South Africa | 6,365 | 5,659 | (11.1) |
EBITDA margin (%) | 37.8 | 35.6 | |
Multi-Links | (164) | (201) | (22.6) |
EBITDA margin (%) | (20.0) | (27.0) | |
Other International | (10) | (38) | (280.0) |
EBITDA margin (%) | (4.3) | (17.1) | |
Other South African | (923) | (306) | 66.8 |
EBITDA margin (%) | (125.9) | (22.6) | |
Eliminations | (142) | (21) | 85.2 |
Total | 5,126 | 5,093 | (0.6) |
Investment income consists of interest received on short term investments and bank accounts. Investment income decreased by 52.5% to R133 million (30 September 2009: R280 million), largely as a result of lower cash balances and short term deposits.
Finance charges include interest paid on local and foreign borrowings, amortised discounts on bonds and commercial paper bills, fair value gains and losses on financial instruments and foreign exchange gains and losses on foreign currency denominated transactions and balances. Finance charges and fair value movements decreased by 8.9% to R684 million (30 September 2009: R628 million) in the six months ended 30 September 2010, primarily due to a 31.4% decrease in interest expense to R514 million (30 September 2009: R749 million) mainly as a result of the 11.0% decrease in the Group's net debt to R6.8 billion (30 September 2009: R7.7 billion) and lower interest rates. Net fair value and foreign exchange rate movements resulted in a loss of R170 million for the six months ended 30 September 2010 (30 September 2009: gain of R121 million). Higher fair value and exchange rate losses were incurred due to the mark to market valuation of forward exchange contracts and interest rate swap agreements as a result of the strengthening of the Rand, particularly against the US dollar, and lower interest rates.
The consolidated tax expense from continuing operations decreased to R740 million (30 September 2009: R814 million). The consolidated effective tax rate for the six months ended 30 September 2010 was 34.8% (30 September 2009: 34.8%).
The Group's financial position remains strong. Net debt, after financial assets and liabilities, from continuing operations increased by 44.6% to R6,828 million from R4,723 million as at 31 March 2010 resulting in a net debt to EBITDA ratio of 0.7 times from 0.5 times at 31 March 2010. On 30 September 2010, the Group had cash balances of R736 million (31 March 2010: R3.8 billion). The proceeds retained from the Vodacom transaction contributed to the higher balances as at 31 March 2010.
The decrease in cash is mainly attributable to the repayment of private placings debt instruments with a nominal value of R1,780 million on maturity and the dividend payment of R3 per share.
The Group's working capital improved from negative working capital of R50 million as at 31 March 2010 to positive working capital of R769 million, mainly due to a R1.2 billion reduction in trade and other payables and a R1.2 billion reduction in short term provisions. The reduction in trade and other payables is attributable to the reduction in capital expenditure and the reduction in short term provisions is primarily as a result of the R608 million payment made to Telcordia for the supplier dispute, a decrease in the provision for bonuses due to the payment in June 2010 as well as a decrease in the short term provision for post-retirement medical benefits for the six month period vs 12 months in March 2010.
for the six months ended 30 September |
|||
---|---|---|---|
In ZAR millions | 2009 |
2010 |
% |
Cash generated from operations | 2,021 | 1,883 | (6.8) |
Add back: Half of Vodacom capital gains tax | 677 | - | - |
Add back: STC on special dividend | 1,112 | 90 | (91.9) |
Add back: Payment to Telcordia | - | 608 | - |
Add back: Employee reduction expenses | - | 144 | - |
Less: Cash flows from investing activities excluding Vodacom proceeds | (3,199) | (2,102) | (34.3) |
Normalised free cash flow | 611 | 623 | 2.0 |
Mobile operating expenditure | - | 205 | - |
Mobile capital expenditure | - | 614 | - |
Normalised fixed-line free cash flow | 611 | 1,442 | 136.0 |
Excluding the effects of the R608 million payment to Telcordia regarding the supplier dispute, STC on the special dividend and employee reduction expenses the Group's free cash flow increased 2.0% to R623 million from R611 million as at 30 September 2009. The inclusion of R205 million operating expenditure and R614 million capital expenditure relating to start up costs of the mobile business decreased free cash flow. Excluding the effects of the mobile business the fixed-line free cash flow increased 136.0% to R1,442 million.
Group capital expenditure, which includes spend on intangible assets, decreased by 21.6% to R2,165 million (30 September 2009: R2,762 million) and represents 12.3% of Group revenue (30 September 2009: 14.8%).
for the six months ended 30 September |
|||
---|---|---|---|
In ZAR millions | 2009 |
2010 |
% |
Telkom South Africa | 1,914 | 1,903 | (0.6) |
Multi-Links | 709 | 158 | (77.7) |
Other International | 25 | 13 | (48.0) |
iWayAfrica | 21 | 8 | (61.9) |
Telkom International | 4 | 5 | 25.0 |
Other South African | 114 | 91 | (20.2) |
Trudon | 28 | 28 | - |
Swiftnet | 7 | 9 | 28.6 |
Data Centre Operations | 53 | 42 | (20.8) |
Corporate centre | 26 | 12 | (53.8) |
Total | 2,762 | 2,165 | (21.6) |
The decrease in capital expenditure was mainly driven by a decrease in the capital expenditure of Multi-Links.
Year ended 31 March |
|||
---|---|---|---|
In ZAR millions | 2009 |
2010 |
% |
Baseline | 1,160 | 815 | (29.7) |
Revenue generating | 1 | 614 | - |
Network evolution | 424 | 239 | (43.6) |
Sustainment | 16 | 30 | 87.5 |
Effectiveness and efficiency | 193 | 87 | (54.9) |
Support | 107 | 99 | (7.5) |
Regulatory and other | 13 | 19 | 46.2 |
Total | 1,914 | 1,903 | (0.6) |
Telkom South Africa's capital expenditure, which includes spending on intangible assets, decreased by 0.6% to R1,903 million (30 September 2009: R1,914 million) and represents 12.0% of Telkom South Africa's revenue (30 September 2009: 11.4%).
Baseline capital expenditure of R815 million (30 September 2009: R1,160 million) was largely for the deployment of technologies to support the growing data services business (including the ADSL footprint), links to the mobile cellular operators and expenditure for access line deployment in selected high growth commercial and business areas. The lower expenditure for the period can be attributed to a more measured approach to the rollout of infrastructure to meet short term demand and revenue generating services. The continued focus on rehabilitating the access network and increasing the efficiencies and reducing redundancies in the transport network contributed to the network evolution and sustainment capital expenditure.
The significant increase in revenue generating capital expenditure was as a result of the mobile business case. We have constructed 800 base stations by the launch date on 18 October 2010.
The decrease in expenditure on network evolution was mainly because the project for the deployment of automated restoration functionality for the National Transport Network, the provisioning of bandwidth for the Soccer World Cup and for future national capacity growth requirements was largely concluded in the 2009 financial year.
Telkom continues to focus on its operations support systems with current emphasis on workforce management, provisioning and fulfilment, assurance and customer care, hardware technology upgrades on the enterprise networks and performance and service management and property optimisation. During the six months ended 30 September 2010, R87 million (30 September 2009: R193 million) was spent on the implementation of several systems.
The support capital expenditure of R99 million (30 September 2009: R107 million) is mainly for provision of new buildings and building extensions in support of network growth and for the development and upgrading of existing equipment buildings, including the associated AC power and air conditioning.
The expenditure on regulatory requirements is primarily for a system to store and manage customer identification documentation and for the initial phase of the Number Portability project.