Notes to the financial statements | Note 22

The significant decrease in short-term deposits and the overall decrease in cash and cash equivalents is due to cash outflows attributable to capex spend. The Group utilised available cash throughout the year and did not obtain funding except for the spectrum auction payment.

The undrawn borrowing facilities are unsecured and bear interest at a rate that will be mutually agreed between the borrower and lender at the time of drawdown. These facilities are subject to annual review and are in place to ensure liquidity. At 31 March 2022, R4.35 billion (31 March 2021: R5.5 billion) of these undrawn facilities were committed.

Short-term deposits

Short-term deposits are made mostly for varying periods of between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates.

Borrowing powers

Telkom's Directors may mortgage or encumber Telkom's property, or any part thereof, and issue debentures, whether secured or unsecured, whether outright or as security for debt, liability or obligation of Telkom or any third party. For this purpose, the borrowing powers of Telkom are unlimited, but are subject to the restrictive financial covenants as well as specific restrictive clauses in the current funding arrangements.

The restricted cash balance comprises an amount of R1 142 million relating to a portion of the ICASA spectrum auction fee.

At the spectrum auction conducted by ICASA in March 2022, Telkom successfully bid for 2 x 10 MHz in the 800 MHz band and 22 MHz in the 3 500 MHz band. On 22 March 2022, Telkom was officially awarded the spectrum at a cost of R2 114 million, of which R1 142 million was payable within 30 working days from 23 March 2022. The outstanding payment of R972 million relates to a portion of the 800 MHz which ICASA is expected to commence the licensing of in July 2022.

Prior to the auction being finalised, Telkom had launched a court application against ICASA, in which it claimed that it was constrained in its ability to acquire the amount of spectrum it needs to compete effectively. In light of the pending litigation proceedings, Telkom, at their discretion, paid the amount of R1 142 million into a trust account at Werksmans Attorneys, their attorney on record, with specific instructions:

• if Telkom is ultimately unsuccessful in the court application or if the matter is settled out of court, the monies are to be used by Werksmans Attorneys to pay the auction fees to ICASA; or
• if Telkom is ultimately successful in the court application, the monies are to be repaid to Telkom, together with the interest that may have accrued and less any fees and charges to be deducted in terms of the agreement signed with Werksmans Attorneys.

The above instruction to Werksmans Attorneys cannot be revoked by Telkom under any circumstances.

The payment of R1 142 million has been reflected as an investing activity on the statement of cash flows.

Refer to note 42 for the events that took place after the reporting date.