Our strategy review

Our customers are at the heart of what we do. This is reflected in our intent to derive value by putting our customers first.

We constantly review our strategy to ensure it remains relevant in our rapidly changing, complex and challenging operating environment. In September 2021, we reviewed our strategy relative to the changes in our external environment. While specific tactics and actions are changing, our strategy framework remains relevant and resilient.

We play a leading role in South Africa's digital revolution. We leverage our converged ICT leadership to enable solutions that enrich our customers' lives, be it at work, through online education, or via entertainment (movies, music and gaming).

This positions us for long-term sustainability through returns to shareholders. It also aligns with the four SDGs most applicable to our business. Refer to Telkom's contribution to the United Nations SDGs for information on our reporting approach to SDGs. Our performance against the SDGs is included in the appendix on Telkom's contribution to the United Nations SDGs.

We achieve our strategy through five strategic pillars. These pillars guide us as local and external conditions show signs of normalising.

Leader in the converged ICT market

Captures the transformational changes to our core business by moving from voice to data, from legacy to fibre, fixed wireless to mobile, and from connectivity to IT services solutions and digital ecosystems.

These five strategic pillars are executed through different business units. Based on the pillars, each business unit has its strategic objectives and focus areas. Each business unit's performance is discussed in the productive capital chapter starting on Openserve.

The strategy is underpinned by Group enablers with initiatives to drive continuous improvement in these areas as part of our strategic planning and execution. Despite increased digitalisation, our people remain the driving force of our business. Therefore, we remain committed to their ongoing development and empowerment for decentralised decision-making. Our move to a more federated operating model, with a lean Corporate Centre, is one facet of this. We realise that improved customer experience depends on simplifying and digitising our processes, and we are implementing initiatives to drive this. Refer to Human capital for more information on human capital.

We continue to strengthen the interaction and synergies between business units, while maintaining their focus and accountability. This improves our agility and responsiveness to the market, and the delivery of products and services to customers.

Our strategic pillars

Portfolio diversification

Target
Expand and invest in e-commerce, big data, gaming, and fintech

We seek opportunities to generate new revenue streams from existing and emerging digital services. Each opportunity will be considered on its merits, and will inform our decision to build, buy or partner.

	Insurance policies	Productive tower portfolio
FY2020	75 271	3 648
FY2021	93 356	3 699
FY2022	120 750	3 916

This shows the development of new revenue streams to complement our core services.

Integrated solutions

Target
Offer end-to-end converged propositions from connectivity to IT solutions

We want to strengthen our ability to comprehensively address our customers’ ICT needs. This requires the appropriate access solution to seamlessly integrate with a range of IT services, from traditional (hardware and software) to new and emerging (cloud and Internet of Things) IT services and analytics.

	Cybersecurity product and service revenue (R’million)	Enterprise next-generation data revenue (R’million)
FY2020	247	615
FY2021	293	898
FY2022	456	1 147

These metrics indicate the progress in replacing traditional fixed-line revenues with cybersecurity and next-generation data revenue.

Victory in broadband

Target
Become the leading broadband provider in South Africa

New digital services are built on high-speed data services. We are accelerating our capability to disrupt the local broadband market by leading in the delivery of innovative and value-rich solutions. These are offered to residential and commercial customers over the optimal access technology – fibre, fixed wireless, mobile, satellite and copper.

	Fixed broadband data traffic (petabytes)	Mobile broadband data traffic (petabytes)
FY2020	1 113	615
FY2021	1 428	942
FY2022	1 665	973

Continuous growth in data traffic highlights the increased demand for data-centric services.

Operational efficiency

Target
Develop operational superiority which provides a competitive advantage

In an increasingly competitive world, our success depends on continually improving the efficiency and effectiveness of our operations.

	Fibre connectivity rate (%)	Fibre average time to install (days)
FY2020	48	5
FY2021	51	3
FY2022	46*	3

The market-leading fibre connectivity rate indicates success in monetising the fibre rollout. Fast installation times are being maintained despite accelerated fibre rollout, which demonstrates robust operational efficiency.

Technology innovation

Target
Modernise and build a state-of-the-art network

We aspire to operate with the best scalable and most efficient network. To achieve this, Telkom will invest in the optimal mix of technologies.

	Fibre access connections	Mobile base stations
FY2020	219 583	5 862
FY2021	281 583	6 430
FY2022	389 109	7 313

These metrics show the accelerated growth in fibre access connections and the steady growth in Telkom’s mobile network.

Telkom operating model

Our federated operating model enables focused strategy execution through the five business units discussed on Telkom's business units. Some of our businesses are separated functionally (Openserve and Telkom Consumer) while others are separated structurally (BCX, Swiftnet and Gyro). We are completing the process of structurally separating Openserve to enable a greater range of Value Unlock opportunities and to complete the federated operating model.

Business unit strategic focus and performance

Our Group ESG Strategy

Telkom is committed to uniting our people and leveraging our capabilities to deliver on the Group's purpose. We have developed our ESG Strategy to be

We aim to create shared value for all our stakeholders in a manner that is environmentally responsible, supports broader social imperatives, and respects the rights of all. In addition, we have selected SDGs where we can have a substantial impact and influence.

Our ESG Strategy has clear focus areas and goals that seek to unlock long- term success for all our stakeholders. It formalises our approach to sustainable business practices, with outcomes tracked and measured to ensure we deliver against our ESG commitments.

Our ESG objectives are enabled by our Group-wide capabilities, portfolio of products and services, and are driven by our people. We have mapped our ESG focus areas to Telkom's capitals to align with our longstanding capitals reporting approach (see Aligning to our capitals six alongside). As noted by our Chairperson, we already have many ESG in flight and planned initiatives in place (see Key ESG initiatives alongside) and our ESG imperative is enabled through these.

Telkom is intentional and unequivocal in its pursuit to deliver sustainable value to all our stakeholders, and our ESG Strategy provides a framework for deliberate action to achieve this.

Our ESG vision

Deliver the future of converged ICT solutions underpinned by our drive to create sustainable economic, environmental and social value

Alignment to our Sustainable Development Goals commitment

ESG focus areas

ESG commitments

Operational efficiencies

Responsibly mitigate climate change impact through our energy, water and waste management practices

• Become Carbon Neutral by 2035
• Achieve Net Zero by 2040

Digital planet

Pioneer digital solutions that help our customers reduce their environmental footprint

• Enable responsible water consumption and energy usage by deploying utilities monitoring IoT devices for our business and government customers

Investing with Purpose

Enable shared value through our social investment, enterprise and supplier development and workplace programmes

• Impact 100 000 lives through SMME spend by 2025
• Impact 30 000 lives through digital literacy by 2023
• Grow our female talent pool for Senior Management positions and demonstrate intent-to-action

Digital services

Deliver ICT solutions which enable socioeconomic uplift

• Bridge the digital divide through our educational, entertainment and financial services platforms
• Grow SA’s business segment by providing our digital solutions to businesses and government

Empowered communities

Broaden access to affordable and inclusive digital connectivity, enabling a better life for our customers

• Improve digital inclusion for South Africans by providing internet access over Telkom’s wide-spread mobile and fixed wireless broadband network

Business stewardship

Instil accountable and ethical operating practices and encourage responsible technology use, data privacy and security

• Promote fair and ethical practices towards our customers and within the organisation
• Enhance contract simplification and billing transparency

 

ESG focus areas

Aligning to our six capitals

		Financial capital	Productive capital	Intellectual capital	Human capital	Social and relationship capital	Natural capital
	Operational efficiencies
	Digital planet
	Investing with Purpose
	Digital services
	Empowered communities
	Business stewardship

 

ESG focus areas

Key initiatives

Operational efficiencies

Digital planet

• Reduce Telkom’s operating environmental footprint
• Deploy loT devices to monitor energy and water utilities on customers’ sites
• Optimise water heating, water efficiency and water harvesting

• Modernise fixed-line infrastructure from legacy copper to fibre
• Sustain cable recycling project
• Review operation of HVACs and replace aged heating, ventilation, and air conditioning

• Optimise consumption of utilities (water and electricity) through loT devices
• Install sensor technologies and light-emitting diode (LED) lighting
• Reduce R22 gas in the system
• Commence wastewater recycling project

Investing with Purpose

Digital services

Empowered communities

• Enhance our culture, engagement and employee experience
• Grow local SMMEs
• Increase uptake of the Telkom Digital Wallet
• Roll out and grow wholesale ISP
• Expand educational content through the Lightbulb education platform
• Provide digital healthcare solutions

• Develop the workforce of tomorrow
• Invest in township innovation
• Expand Telkom Pay (mPOS)
• Provide superior backhaul services
• Provide educational videos through TelkomONE

• Recruit to grow an inclusive workforce
• Zero-rate access to key public websites
• Expand edtech services
• Connect more homes to fibre
• Expand the mobile network

Business stewardship

• Engage customers on contract and financial literacy

• Connect more townships
• Simplify our contracts

• Enhance accessibility to internet services for environmental management and social services organisations