Notes to the financial statements | Note 11

11. Property, plant and equipment
 
   2022  2021 
 Group   Cost
Rm 		 Accumulated depreciation
and write-offs
Rm 		  Carrying
value
Rm 		  Cost
Rm 		 Accumulated depreciation
and write-offs
Rm 		  Carrying
value
Rm 
Freehold land and buildings  7 317  (4 410) 2 907  7 209  (4 416) 2 793 
Network equipment  95 464  (64 579) 30 885  91 517  (63 518) 27 999 
Support equipment  5 948  (4 595) 1 353  5 619  (4 531) 1 088 
Furniture and office equipment  767  (515) 252  889  (577) 312 
Data processing equipment and software  3 375  (2 735) 640  3 750  (3 105) 645 
Under construction  2 172  –  2 172  3 268  –  3 268 
Other1  513  (403) 110  647  (481) 166 
   115 556  (77 237) 38 319  112 899  (76 628) 36 271 

 

Company  Cost 
Rm 		 Accumulated 
depreciation and 
write-offs 
Rm 		 Carrying 
value 
Rm 		 Cost 
Rm 		 Accumulated 
depreciation and 
write-offs 
Rm 		 Carrying 
value 
Rm 
Freehold land and buildings  4 463  (2 430) 2 033  4 396  (2 348) 2 048 
Network equipment  94 553  (63 880) 30 673  90 381  (62 648) 27 733 
Support equipment  4 738  (3 874) 864  4 494  (3 763) 731 
Furniture and office equipment  149  (58) 91  163  (58) 105 
Data processing equipment and software  3 334  (2 709) 625  3 709  (3 082) 627 
Under construction  1 349  –  1 349  2 590  –  2 590 
Other1  410  (310) 100  538  (381) 157 
   108 996  (73 261) 35 735  106 271  (72 280) 33 991 
1 Other includes, for example, intruder detection systems, surveillance equipment, access control systems, mechanical aids and tools, etc.

Finance charges of R78 million (31 March 2021: R31 million) were capitalised to property, plant and equipment and intangible assets in the current financial year.

The capital expenditure under property, plant and equipment relates to expansions of R3 329 million (31 March 2021: R4 552 million) for Group and R2 587 million (31 March 2021: R4 145 million) for Company. Expenditure due to maintenance is R3 621 million (31 March 2021: R3 112 million) for Group and R3 617 million (31 March 2021: R2 967 million) for Company.

No material property, plant and equipment has been pledged as security.

The carrying amounts of property, plant and equipment can be reconciled as follows:

Group 
 		 Carrying
value at the beginning
of the year
Rm 		 Additions
Rm 		 Transfers
Rm 		 Foreign
currency translation
Rm 		 Disposals
Rm 		 Depreciation
Rm 		 Write-offs, impairments
and
impairment reversals
Rm 		 Carrying
value at the
end of the
year
Rm 
2022                         
Freehold land and                         
buildings  2 793  92  257  1  (3) (220) (13) 2 907 
Network equipment  27 999  5 682  1 173  –  2  (3 844) (127) 30 885 
Support equipment  1 088  122  518  –  –  (358) (17) 1 353 
Furniture and office                         
equipment  312  26  6  –  (2) (79) (11) 252 
Data processing                         
equipment and software  645  177  7  –  –  (185) (4) 640 
Under construction  3 268  818  (1 885) –  (10) –  (19) 2 172 
Other  166  52  (79) –  –  (27) (2) 110 
   36 271  6 969  (3) 1  (13) (4 713) (193) 38 319 

 

2021                         
Freehold land and buildings  2 871  72  99  (1) (4) (214) (30) 2 793 
Network equipment  26 689  4 729  750  7  –  (4 039) (137) 27 999 
Support equipment  1 216  243  (22) –  (2) (345) (2) 1 088 
Furniture and office equipment  299  76  18  (1) –  (74) (6) 312 
Data processing equipment and software  666  124  51  –  –  (200) 4  645 
Under construction  1 680  2 432  (825) –  (1) –  (18) 3 268 
Other  187  16  5  –  –  (46) 4  166 
   33 608  7 692  76  5  (7) (4 918) (185) 36 271 

 

The carrying amounts of property, plant and equipment can be reconciled as follows:
Company 		 Carrying 
value at the
beginning 
of the year 
Rm 		 Additions 
Rm 		 Transfers 
Rm 		 Disposals 
Rm 		 Depreciation 
Rm 		 Write- offs 
and 
impairment 
reversals 
Rm 		 Carrying  
value at the 
end of the 
year 
Rm 
2022                      
Freehold land and buildings  2 048  92  64  (1) (158) (12) 2 033 
Network equipment  27 733  5 682  1 120  –  (3 741) (121) 30 673 
Support equipment  732  121  200  –  (181) (8) 864 
Furniture and office equipment  106  –  5  –  (11) (9) 91 
Data processing equipment and software  627  176  8  –  (183) (3) 625 
Under construction  2 589  79  (1 302) –  –  (17) 1 349 
Other  156  51  (83) –  (24) –  100 
   33 991  6 201  12  (1) (4 298) (170) 35 735 

 

2021                      
Freehold land and buildings  2 133  68  31  (1) (153) (30) 2 048 
Network equipment  26 441  4 712  650  –  (3 938) (132) 27 733 
Support equipment  775  150  14  –  (207) (1) 731 
Furniture and office equipment  95  10  16  –  (11) (5) 105 
Data processing equipment and software  646  123  51  –  (197) 4  627 
Under construction  1 269  2 035  (696) –  –  (18) 2 590 
Other  172  15  6  –  (40) 4  157 
   31 531  7 113  72  (1) (4 546) (178) 33 991 

Expansion of the mobile network contributed to 42% of the additions to assets; 33% of capital expenditure was on the deployment of fibre; 11% of the capital expenditure was on the next-generation POTN core network; 6% of the capital expenditure relates to Service on Demand driven expansion; and 3% relates to the investment on rehabilitation and sustainment of the network. The balance of 5% capital expenditure is attributable to investment in IT solutions, upgrade and growth projects on Telkom Properties and Shared Services. The focus on the mobile network expansion and fibre rollout is expected to continue over the next few years.

The Group and Company have a process of determining whether an asset, which incorporates both a tangible and an intangible element, should be recognised as a tangible or an intangible asset based on management's judgement, facts available and the significance of each element to the total value of the asset. Assets with a carrying value to the net amount of R12 million (31 March 2021: R64 million) for Group and Company were transferred from intangible assets to property, plant and equipment in the current year. Assets with a carrying value to the net amount of R20 million (31 March 2021: Rnil) for Group were transferred from property, plant and equipment to intangible assets in the current year.

At Group, transfers were effected between property, plant and equipment, intangible assets and inventory (the transfers only take place from CWIP). Transfers in Company mostly related to property, plant and equipment and intangible assets.

Assets with a carrying value of R33 million (31 March 2021: R42 million) for Group and R33 million (31 March 2021: R41 million) for Company relate to inventory that was transferred to property, plant and equipment in the current year.

Changes to the estimated useful lives of property, plant and equipment resulted in a decrease in depreciation to the value of R508 million (31 March 2021: R110 million) for Company and R514 million (31 March 2021: R120 million) for Group. Refer to note 6.7. for the useful lives.

Property, plant and equipment consists mainly of network equipment. The network equipment within the Company does not generate cash inflows that are largely independent of those from other assets or groups of assets. Property, plant and equipment are included for testing in the impairment testing for the Telkom CGU. No impairment was identified. Refer to note 13.. The recoverability of PPE is largely dependent on macro-economic factors, which include cash flows to be generated through the network assets, as well as internal assumptions and estimates related to realisation levels and operating costs. The impairment test included assessing the recoverable amount of PPE, with reference to all cash flows (including the fair value contributory asset income), and comparing this to the carrying amount of the PPE. Refer to note 13.

   Group 
   31 March 2022 
 Property, plant and equipment subject to operating leases  Freehold 
land and 
buildings 
Rm 		 Furniture 
and office 
equipment 
Rm 
Opening carrying amount  761  57 
Additions  36  11 
Depreciation  (50) (3)
Transfers  194  (1)
Disposals  (4) (28)
Closing carrying amount  937  36