The executive committee (exco) is the Group’s chief operating decision maker (CODM). Management has determined the operating segments based on the reports reviewed by exco that are used to make strategic decisions, allocate resources and assess performance of each reportable segment.

The operating segments classification is based on the business units through which Telkom provides communications products and services via its customer-facing units: Consumer, Openserve and Telkom Small and Medium Business (SMB), as well as its subsidiaries, Gyro and BCX. The customer-facing units are supported by the Corporate Centre.

For the 2021 financial year, reports submitted to exco separately reported SMB's financial performance (statement of profit or loss and other comprehensive income). SMB consists of small and medium businesses that were previously managed as part of BCX, Consumer and Yellow Pages (previously included in “Other”).

The reportable segments have been determined as Openserve, Consumer, BCX, Gyro and “Other”. The SMB segment has been aggregated into the Consumer segment. The aggregation is based on the similarity in the nature of products and services. SMB customers include primarily sole proprietors and such customers who typically consume simplex products which are similar in nature to those consumed within the Consumer segment and the profile of the customers are similar by nature. A large portion of the SMB customer base makes use of the Telkom Direct Stores channels which is the same channel as that of the Consumer customers.

The CODM reviews the performance of the operating segments on an EBITDA basis. EBITDA is adjusted for significant non-recurring items such as restructurings and adoption of new accounting standards, when applicable. The current year EBITDA has been normalised for voluntary severance, retirement and retrenchment package expenses of R270 million. EBITDA in the published FY2020 financial statements was adjusted to include expected credit losses of R626 million on trade receivables and contract assets, arising from the expected impact of COVID-19. In the current year, management revised the assessment of whether the expected impact of COVID-19 is a significant non-recurring  item, and taking into account actual experience, it has been assessed that the impact of COVID-19 on expected credit losses is a recurring item that should be taken into account in the ordinary course of business. As such, management has made a decision not to adjust EBITDA for the expected credit losses arising from the impact of COVID-19. The comparative year has therefore been restated and normalised only for voluntary severance and retirement expenses of R1 186 million.

EBITDA is defined as earnings before finance income and finance cost (which includes gains and losses on foreign exchange transactions), tax, depreciation and amortisation, and is also presented inclusive of the following items:

• Interest revenue; and
• Interest on overdue accounts

The interest revenue is included in operating revenue as a separate component of revenue.

Entity wide disclosures
All material non-current assets other than financial instruments, deferred tax assets, post-employment benefit assets, and rights arising under insurance contracts related to the segments above are located in South Africa. Assets belonging to the subsidiaries of BCX outside of South Africa are not considered material to the Group as a whole.

No single customer contributes more than 10% of the revenue from external customers and thus no specific information relating to major customers is included in the segment information above.

For the purpose of assessing revenue contribution per customer, management does not treat Government as a single customer.