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141
Telkom Integrated Report 2017
4 Total income
2017
Rm
2016
Rm
Operating revenue
40 970
37 325
Other income
734
1 281
Investment income
219
203
Operating revenue increased due to higher mobile data revenue, higher equipment sales and the BCX revenue. This is partially offset by the
decline in fixed-line voice revenue and lower connectivity revenue.
The decrease in other income is mainly attributable to lower gains from the sale of properties of R487 million when compared to the year ended
31 March 2016.
In the current financial year Openserve reassessed its leased lines customer relationship period (CRP) that is used for the deferral of installation
fee revenue. The CRP was changed from five years to four years. This is more reflective of the modern day customer behaviour within
the industry. The change in estimate resulted in revenue increasing by R20 million in the current year.
5 Expenses
2017
Rm
Restated
2016
Rm
5.1 Payments to other operators
2 618
2 793
Payments to other operators decreased mainly due to the
lower traffic volumes.
5.2 Cost of sales
6 498
5 011
The increase in cost of sales is largely attributable to the increase of IT service and the increase in the sale
of high-end devices as well as the effect of the full year consolidation of BCX.
Change in comparatives
Refer to note 2.3.
5.3 Employee expenses
10 562
12 165
The decrease in employee expenses is mainly due to the decline in headcount and the lower VSP/VERP
expense compared to the prior financial year.
Change in comparatives
Refer to note 2.3.
5.4 Selling, general and administrative expenses
7 237
5 796
The increase in selling, general and administrative expenses is mainly due to the full year inclusion of BCX and
increased outsourcing costs.
Change in comparatives
Refer to note 2.3.
5.5 Service fees
2 869
2 965
The decrease is mainly due to lower company transformation and property management expenses.
Change in comparatives
Refer to note 2.3.
5.6 Operating leases
1 045
1 100
The decrease in operating leases is mainly due to a decrease in the number of vehicles leased.
Change in comparatives
Refer to note 2.3.
5.7 Depreciation, amortisation, impairment and write-offs
5 661
5 498
Depreciation of property, plant and equipment
4 752
4 448
Amortisation of intangible assets
766
880
Write-offs, impairment and losses of property, plant and equipment and intangible assets
143
170
The increase is due to accelerated depreciation of old technology as we intensify the roll-out of fibre and LTE as well as higher asset
write-offs.
As a result of the transformation programme, the group reassessed the useful lives of certain technologies to address the challenges within
the competitive market and IP-based products and services. The reassessment of useful lives had the effect of increasing the depreciation
and amortisation expense for the year ended 31 March 2017 by R325 million (2016: R192 million). Depreciation and amortisation for each year
of the remaining useful lives of the individually reassessed equipment will be significantly lower.
Change in comparatives
Refer to note 2.3