We define our material themes as the factors that substantively affect our ability to create value for stakeholders over time. Management's materiality determination process and the material themes were approved by the Group Exco, the Audit Committee and the Board.
We consider internal and external factors, relying on established processes to identify and confirm our material themes. This process is set out below, with cross-references to where more information can be found.
Our material themes represent a prioritised view of our material matters and were considered in compiling this report. The current impact of these matters are reflected in our FY2022 performance discussed below and the GCEO’s report.
Telkom operates in a highly regulated environment affected by policy uncertainty and inconsistency, and continuously evolving regulations and legislation. We are also affected by international regulatory trends, irrespective of the different operating contexts, the South African political environment, and the resources required to implement new or changing regulations.
The competitive landscape includes OTT players and other non-traditional entrants disrupting the market, and the convergence of telecommunications, technology, media and consumer electronics.
This provides us with collaboration opportunities with OTT players and requires Telkom to sharpen its focus on capital allocation, cost optimisation, business growth, innovative products and services, and customer satisfaction.
Our customers expect a differentiated value proposition where they receive value for money. Their experience is influenced by price, available products and services, service speed and reliability, data security, and IT system stability.
In the context of Telkom’s competitive landscape, customer experience affects our reputation and customer attraction and retention. Therefore, Telkom must appropriately invest in products and services, systems and employees to ensure customer expectations are met.
Cyberattacks and data breaches can potentially impact Telkom’s service levels, leading to customer dissatisfaction, reputational damage, business disruption and loss of revenue. This requires continuous focus on information security and business continuity plans. Cyberthreats provide the Group with opportunities to develop new customer solutions (information security).
Local and international economies influence Telkom’s ability to grow the business, the cost of doing business and customers’ spending power. This is affected by muted South African economic performance, the South African political environment and geopolitical pressures, investor and business confidence, financial risks related to liquidity and foreign exchange and interest rate exposure, effectiveness of cost optimisation efforts, and socio-economic factors, such as the high youth unemployment rate. This is exacerbated by the impact of COVID-19.
Telkom operates in a highly regulated environment affected by policy uncertainty and inconsistency, and continuously evolving regulations and legislation. We are also affected by international regulatory trends, irrespective of the different operating contexts, the South African political environment, and the resources required to implement new or changing regulations.
Telkom needs to remain abreast of advances in ICT and disruptive technology. We need to ensure long-term viability by developing innovative products and services and enhancing the Group’s networks and infrastructure. This requires appropriate infrastructure, network investment and skilled employees to support product development and delivery. Focus areas include our ongoing investments in fibre and mobile infrastructure while optimising the return on invested capital (ROIC).
Telkom needs to mitigate and adapt to climate change impacts (specifically extreme weather conditions) and use our resources responsibly to protect our business and the environment. These impacts can occur on our direct operations (operational impacts) or from poor customer service stemming from acute and chronic weather conditions (reputational and strategic impacts). Incurring penalties and fines will impact our reputation as a good corporate citizen.