| |
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 and Small and Medium Business (SMB), as well as its subsidiaries, BCX, Openserve 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's customers include primarily sole proprietors and customers who typically consume simple products and are similar to the 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 channel which is the same channel as that of the Telkom Consumer customers.
The CODM reviews the performance of the operating segments on an EBITDA basis. EBITDA is adjusted for significant non-recurring items such as restructuring, when applicable. The current year EBITDA has been normalised for restructuring costs of R1 065 million.
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 2023 |
| Revenue from external customers1 |
4 089 |
25 364 |
12 961 |
724 |
– |
– |
– |
43 138 |
| Revenue from contracts with
customers recognised over time |
3 976 |
21 774 |
9 558 |
– |
– |
– |
– |
35 308 |
| Voice |
– |
5 864 |
2 528 |
– |
– |
– |
– |
8 392 |
| Interconnection |
281 |
505 |
– |
– |
– |
– |
– |
786 |
| Data |
3 440 |
14 806 |
2 718 |
– |
– |
– |
– |
20 964 |
| Information technology services |
– |
– |
3 665 |
– |
– |
– |
– |
3 665 |
| Customer premises equipment |
|
|
|
|
|
|
|
|
| related services |
– |
97 |
605 |
– |
– |
– |
– |
702 |
| Interest revenue |
– |
319 |
42 |
– |
– |
– |
– |
361 |
| Sundry revenue |
255 |
183 |
– |
– |
– |
– |
– |
438 |
| Revenue from contracts with
customers recognised at a point
in time |
– |
3 590 |
3 403 |
– |
– |
– |
– |
6 993 |
| Customer premises equipment |
– |
3 529 |
739 |
– |
– |
– |
– |
4 268 |
| Information technology hardware |
– |
– |
2 664 |
– |
– |
– |
– |
2 664 |
| Sundry revenue |
– |
61 |
– |
– |
– |
– |
– |
61 |
| Lease revenue |
113 |
– |
– |
724 |
– |
– |
– |
837 |
| Intersegmental operating revenue |
8 808 |
309 |
1 291 |
906 |
541 |
(11 010) |
(845) |
– |
| Other income |
231 |
821 |
69 |
13 |
838 |
(1 109) |
– |
863 |
| Insurance service result |
– |
– |
– |
– |
1 |
– |
– |
1 |
| Total expenses |
(9 436) |
(23 193) |
(12 514) |
(512) |
(914) |
12 119 |
– |
(34 450) |
| Cost of handsets, equipment, |
|
|
|
|
|
|
|
|
| software and directories |
– |
(4 305) |
(2 931) |
– |
– |
147 |
– |
(7 089) |
| Sales commission, incentives and |
|
|
|
|
|
|
|
|
| logistical costs |
– |
(2 522) |
– |
– |
– |
– |
– |
(2 522) |
| Payments to other operators |
(709) |
(2 685) |
(409) |
– |
– |
404 |
– |
(3 399) |
| Employee expenses |
(3 240) |
(1 246) |
(3 394) |
(133) |
(214) |
– |
– |
(8 227) |
| Other expenses3 |
(752) |
(962) |
(4 085) |
(28) |
(265) |
3 708 |
– |
(2 384) |
| Wholesale voice and non-voice |
|
|
|
|
|
|
|
|
| services4 |
– |
(6 174) |
(196) |
– |
– |
6 174 |
– |
(196) |
| Maintenance3 |
(1 689) |
(2 453) |
(838) |
(25) |
(67) |
918 |
– |
(4 154) |
| Marketing3 |
(26) |
(677) |
(82) |
(1) |
(26) |
– |
– |
(812) |
| Impairment of receivables, |
|
|
|
|
|
|
|
|
| contract assets and loans3 |
(30) |
(1 058) |
(90) |
(20) |
(57) |
– |
– |
(1 255) |
| Service fees3 |
(2 834) |
(987) |
(459) |
(298) |
(279) |
777 |
– |
(4 080) |
| Lease-related expenses3 |
(156) |
(124) |
(30) |
(7) |
(6) |
(9) |
– |
(332) |
| Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) for reportable segments including intersegmental transactions |
3 692 |
3 301 |
1 807 |
1 131 |
466 |
– |
(845) |
9 552 |
| Reconciliation of operating loss to loss before tax |
|
|
|
|
|
|
|
|
| Normalisations |
|
|
|
|
|
|
|
|
| Restructuring expenses |
|
|
|
|
|
|
|
(1 065) |
| Earnings before interest, tax, depreciation and amortisation (EBITDA) for reportable segments |
|
|
|
|
|
|
|
8 487 |
| Depreciation, amortisation, impairments and write-offs |
|
|
|
|
|
|
|
(20 653) |
| Operating loss |
|
|
|
|
|
|
|
(12 166) |
| Investment income |
|
|
|
|
|
|
|
148 |
| Net finance charges, hedging costs and fair value movements |
|
|
|
|
|
|
|
(1 484) |
| Loss before taxation |
|
|
|
|
|
|
|
(13 502) |
| Other segment information |
|
|
|
|
|
|
|
|
| Capital expenditure of property, plant and equipment and intangible assets |
2 700 |
3 820 |
455 |
261 |
165 |
– |
– |
7 401 |
| Restated March 20222, 3 |
Openserve
Rm |
Telkom
Consumer
Rm |
BCX
Rm |
Gyro
Rm |
Other
Rm |
Eliminations
Rm |
IFRS 16
reversal
Rm |
Consolidated
Rm |
| Revenue from external customers1 |
3 792 |
25 411 |
12 867 |
686 |
– |
– |
– |
42 756 |
| Revenue from contracts with customers recognisedover 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 |
| 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 |
1 414 |
934 |
1 057 |
(12 562) |
(821) |
– |
| Other income |
276 |
575 |
64 |
– |
392 |
(621) |
– |
686 |
| Insurance service result |
– |
– |
– |
– |
(2) |
– |
– |
(2) |
| Total expenses |
(9 319) |
(21 643) |
(12 492) |
(399) |
(862) |
13 183 |
– |
(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 |
(3 311) |
(1 210) |
(3 590) |
(133) |
(456) |
7 |
– |
(8 693) |
| Other expenses3 |
(1 319) |
(947) |
(4 512) |
(30) |
(180) |
4 732 |
– |
(2 256) |
| Wholesale voice and non-voice |
|
|
|
|
|
|
|
|
| services4 |
– |
(6 492) |
(59) |
– |
– |
6 492 |
– |
(59) |
| Maintenance3 |
(1 760) |
(2 169) |
(892) |
(23) |
(111) |
1 076 |
– |
(3 879) |
| Marketing3 |
(32) |
(618) |
(61) |
(1) |
(18) |
1 |
– |
(729) |
| Impairment of receivables, contract |
|
|
|
|
|
|
|
|
| assets and loans3 |
36 |
(811) |
(42) |
14 |
– |
– |
– |
(803) |
| Service fees3 |
(1 989) |
(767) |
(429) |
(224) |
(153) |
174 |
– |
(3 388) |
| Lease-related expenses3 |
(227) |
28 |
(41) |
(2) |
56 |
18 |
– |
(168) |
| Earnings before interest, tax, for reportable segments including intersegmental transactions |
4 385 |
4 685 |
1 853 |
1 221 |
585 |
– |
(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 |
| 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. Group revenue increased marginally, driven by an increase in mobile handset and IT hardware sales. This was offset by a decrease in fixed, mobile and IT service revenue due to the challenging operating environment. Refer to note 3.4.1 for more details regarding the corresponding increase in cost of handsets, equipment, software and directories. |
| 2 |
Effective from 1 April 2022, Telkom has terminated the Telkom Group Information Technology (TGIT) contract with BCX and transferred the respective BCX employees to the respective business units within Telkom. By terminating the TGIT agreement and transferring the employees, Telkom has changed the structure of its internal organisation in a manner that causes the composition of its reportable segments to change. The prior period has been restated to account for the change in the way the TGIT business is viewed by the CODM. |
| 3 |
In the current year, the selling, general and administrative expenses line item has been expanded to disclose the material income and expense line items in order to comply with the JSE proactive monitoring process in respect of the application of IFRS 8. The prior year segment has been re-presented for comparability purposes. |
| 4 |
Wholesale voice and non-voices services are Openserve charges to Telkom Company for data connectivity, broadband access, managed services and line rental cost. In the prior year, these expenses were interdivisional. These interdivisional expenses would have been eliminated before the carve-out within Telkom Company as it related to business units within the Company. Post the carve-out, these expenses are not eliminated at Company level, resulting in an increase in the overall balance. In the prior year, wholesale voice and non-voice services were included in the other expenses line item. At a Group level, the prior year has been re-presented to be consistent with the Company disclosure. |
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. |
