Notes to the financial statements | Note 3

3. Segment information
 

The Group 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: Telkom Consumer, Openserve and Telkom Small and Medium Business (SMB), as well as its subsidiaries, BCX and Gyro. The customer-facing units are supported by the Corporate Centre.

The reportable segments have been determined as Openserve, Telkom Consumer, BCX, Gyro and "Other". The SMB segment has been aggregated into the Telkom Consumer segment. The aggregation is based on the similarity in the nature of products and services. SMB customers include primarily sole proprietors and customers who typically consume simplex products and are similar to product nature and customer profiling within the Telkom Consumer segment. 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 Telkom Consumer customers.

EBITDA is defined as earnings before investment income and finance cost (which includes gains and losses on foreign exchange transactions), tax, depreciation, amortisation and write-offs, impairments and losses of property, plant and equipment and intangible assets, and is also presented inclusive of the following items:

  • Interest revenue
  • Interest on overdue accounts

Interest revenue is included in operating revenue as a separate component of revenue.

March 2022  Openserve 
Rm 		 Telkom 
Consumer 
Rm 		 BCX 
Rm 		 Gyro 
Rm 		 Other 
Rm 		 Elimina- 
tions 
Rm 		 IFRS 16 
reversal 
Rm 		 Consoli- 
dated 
Rm 
Revenue from external customers1  3 792  25 411  12 867  686  –  –  –  42 756 
Revenue from contracts with customers recognised over time  3 698  22 190  10 777  –  –  –  –  36 665 
Voice  –  6 535  2 980  –  –  –  –  9 515 
Interconnection  319  482  –  –  –  –  –  801 
Data  3 248  14 581  3 011  –  –  –  –  20 840 
Information technology services  –  –  3 971  –  –  –  –  3 971 
Customer premises equipment related services  –  105  739  –  –  –  –  844 
Interest revenue  –  256  26  –  –  –  –  282 
Sundry revenue  131  231  50  –  –  –  –  412 
Revenue from contracts with customers recognised at a point in time  –  3 221  2 090  –  –  –  –  5 311 
Customer premises equipment  –  3 111  483  –  –  –  –  3 594 
Information technology hardware  –  –  1 607  –  –  –  –  1 607 
Sundry revenue  –  110  –  –  –  –  –  110 
Lease revenue  94  –  –  686  –  –  –  780 
Intersegmental operating revenue  9 636  342  2 462  934  1 057  (13 610) (821) – 
Other income  276  575  64  –  392  (621) –  686 
Insurance service result  –  –  –  –  (2) –  –  (2)
Total expenses  (9 541) (21 829) (13 105) (399) (889) 14 231  –  (31 532)
Cost of handsets, equipment, software and directories  –  (3 686) (2 274) –  –  312  –  (5 648)
Sales commission, incentives and logistical costs  –  (2 369) (147) –  –  –  –  (2 516)
Payments to other operators  (717) (2 602) (445) –  –  371  –  (3 393)
Employee expenses  (3 086) (1 021) (4 024) (133) (429) –  –  (8 693)
Selling, general and administrative expenses  (5 738) (12 151) (6 215) (266) (460) 13 548  –  (11 282)
Earnings before interest, tax, depreciation and amortisation (EBITDA) for reportable segments including intersegmental transactions  4 163  4 499  2 288  1 221  558  –  (821) 11 908 
Depreciation, amortisation, impairments and write-offs                (6 975)
Operating profit                4 933 
Investment income                144 
Net finance charges, hedging costs and fair value movements                (1 279)
Profit before taxation                3 798 
Other segment information                 
Capital expenditure of property, plant and equipment and intangible assets  3 472  2 832  567  418  195  –  –  7 484 

 

March 2021  Openserve 
Rm 		 Telkom 
Consumer 
Rm 		 BCX 
Rm 		 Gyro 
Rm 		 Other 
Rm 		 Elimina- 
tions 
Rm 		 IFRS 16 
reversal 
Rm 		 Consoli- 
dated 
Rm 
Revenue from external customers1  3 690  25 520  13 324  688  –  –  –  43 222 
Revenue from contracts with customers recognised over time  3 589  22 614  11 676  –  –  –  –  37 879 
Voice  –  7 170  3 182  –  –  –  –  10 352 
Interconnection  435  485  –  –  –  –  –  920 
Data  3 077  14 578  3 127  –  –  –  –  20 782 
Information technology services  –  –  4 511  –  –  –  –  4 511 
Customer premises equipment related services  –  132  770  –  –  –  –  902 
Interest revenue  –  240  42  –  –  –  –  282 
Sundry revenue  77  9  44  –  –  –  –  130 
Revenue from contracts with customers recognised at a point in time  –  2 906  1 648  –  –  –  –  4 554 
Customer premises equipment  –  2 520  215  –  –  –  –  2 735 
Information technology hardware  –  –  1 433  –  –  –  –  1 433 
Sundry revenue  –  386  –  –  –  –  –  386 
Lease revenue  101  –  –  688  –  –  –  789 
Intersegmental operating revenue  9 795  295  2 418  765  836  (13 428) (681) – 
Other income  197  540  76  –  283  (477) –  619 
Insurance service result  –  –  –  –  15  –  –  15 
Total expenses  (9 507) (21 347) (13 354) (318) (1 262) 13 905  –  (31 883)
Cost of handsets, equipment, software and directories  –  (2 846) (2 025) –  –  90  –  (4 781)
Sales commission, incentives and logistical costs  –  (2 243) (182) –  –  –  –  (2 425)
Payments to other operators  (770) (3 052) (491) –  –  435  –  (3 878)
Employee expenses  (2 917) (970) (4 159) (113) (886) 3  –  (9 042)
Selling, general and administrative expenses2  (5 820) (12 236) (6 497) (205) (376) 13 377  –  (11 757)
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) for reportable segments including intersegmental transactions  4 175  5 008  2 464  1 135  (128) –  (681) 11 973 
Reconciliation of operating profit to profit before tax                 
Normalisations                 
Voluntary severance, retirement and retrenchment package expenses                (270)
Earnings before interest, tax, depreciation and amortisation (EBITDA) for reportable segments                11 703 
Depreciation, amortisation, impairments and write-offs                (6 870)
Operating profit                4 833 
Investment income                188 
Income from associates                1 
Net finance charges, hedging costs and fair value movements                (1 527)
Profit before taxation                3 495 
Other segment information                 
Capital expenditure of property, plant and equipment and intangible assets  2 942  4 597  519  217  173  –  –  8 448 
1 Revenue includes transactions generated by subsidiaries of BCX in countries outside of South Africa. These are however not considered material to the Group and are thus not disclosed separately.
2 In the prior year, service fees and leaserelated expenses were disclosed separately. These have been included in selling, general and administrative expenses in the current year to simplify the disclosure. The prior year segment has been re-presented for comparability purposes.

 

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.