29 Employee benefits		Group							Company
			2017 Rm			2016 Rm			2017 Rm			2016 Rm
Non-current assets			635			846			635			846
Telkom Pension Fund asset			23			114			23			114
Post-retirement medical aid recognition of net plan asset			612			732			612			732

The group provides benefits for its permanent employees through the Telkom Pension Fund and the Telkom Retirement Fund. Membership of one of the funds is compulsory. In addition, certain retired employees receive medical aid benefits and a telephone rebate. The liabilities for all of the benefits are actuarially determined in accordance with accounting requirements each year. In addition, statutory funding valuations for the retirement and pension funds are performed at intervals not exceeding three years.

Actuarial valuations were performed by qualified actuaries to determine the benefit obligation, plan asset and service costs for the pension and retirement funds for each of the financial periods presented.

The Telkom Pension Fund
The Telkom Pension Fund is a defined benefit fund that was created in terms of the Post Office Amendment Act 85 of 1991. The Telkom Pension Fund consists only of active members.

The latest actuarial valuation performed at 31 March 2017 indicates that the pension fund is in a surplus position of R104 million (2016: R191 million). The recognition of the surplus is limited due to the application of the asset limitation criteria in IAS 19 Employee Benefits. The Telkom Pension Fund is closed to new members. The pension plan exposes the group to actuarial risks, such as longevity risk, currency risk, interest rate risk and market risk.

The funded status of the Telkom Pension Fund is disclosed below.

		Group							Company
			2017  Rm			2016  Rm			2017  Rm			2016  Rm
The Telkom Pension Fund
The net periodic pension costs include the following components:
Interest cost on projected benefit obligations			10			10			10			10
Service cost on projected benefit obligations			3			3			3			3
Interest on plan assets after asset restriction			(21)			(12)			(21)			(12)
Net periodic pension gain recognised in profit and loss			(8)			1			(8)			1
The net periodic other comprehensive income includes the following components:
Actuarial gain from financial assumption changes			–			–			–			–
Asset ceiling in terms of IAS 19.64			6			86			6			86
Net periodic pension expense recognised in other comprehensive income			6			86			6			86
Cumulative actuarial gain			(79)			(84)			(79)			(84)
Pension fund contributions			(1)			(1)			(1)			(1)
The status of the pension plan obligation is as follows:
At beginning of year			130			140			130			140
Interest cost			10			10			10			10
Current service cost			3			3			3			3
Employee contributions			1			1			1			1
Benefits paid			(50)			(18)			(50)			(18)
Actuarial (gain)			(2)			(6)			(2)			(6)
Benefit obligation at end of year			92			130			92			130
Plan assets at fair value:
At beginning of year			320			320			320			320
Interest on plan assets			28			23			28			23
Benefits paid			(50)			(18)			(50)			(18)
Contributions			1			1			1			1
Transferred to Telkom Retirement Fund			(96)			–			(96)			–
Actuarial (loss)			(7)			(6)			(7)			(6)
Plan assets at end of year			196			320			196			320
Present value of funded obligation			92			130			92			130
Fair value of plan assets			(196)			(320)			(196)			(320)
Fund surplus			(104)			(190)			(104)			(190)
Asset ceiling in terms of IAS 19.64			82			76			82			76
Recognised net asset			(22)			(114)			(22)			(114)
Interest on plan assets after asset restriction			21			12			21			12
Actuarial (loss) on plan assets			(7)			(6)			(7)			(6)
Actual return on plan assets			14			6			14			6
Plan assets balance comprises of:
Cash			12			48			12			48
Equity			84			125			84			125
Property			8			7			8			7
Bonds			35			51			35			51
Commodities			6			6			6			6
Foreign investments			51			83			51s			83
Total			196			320			196			320
Sensitivity analysis
Increasing discount rate by 0.5%			(3)			(4)			(3)			(4)
Decreasing discount rate by 0.5%			3			5			3			5

Funding arrangements
The Telkom Pension Fund investment strategy has been implemented through the appointment of two asset managers with global balanced mandates. Within these mandates the manager is responsible for and has sole discretion of determining the asset allocation, i.e. the mix of the various asset classes used, based on their investment views. In addition a small additional allocation to a specialist manager in the Africa Equity and SA Cash asset classes was added to further diversify the portfolio and to provide return enhancement. The Telkom Pension Fund’s total asset allocation is thus derived by combining the two balanced asset managers’ portfolios with the Africa and additional cash allocation.

Principal actuarial assumptions were as follows:
Assumptions regarding future mortality are based on mortality tables. The current longevities underlying the values of the liabilities in the defined benefit plan are as follows:

		Group							Company
			2017			2016			2017			2016
Males over 65			16.5			16.4			16.5			16.4
Females over 65			20.6			20.5			20.6			20.5
Discount rate (%)			9.7			9.5			9.7			9.5
Interest on plan assets (%)			9.7			9.5			9.7			9.5
Salary inflation rate (%)			8.0			7.9			8.0			7.9
Pension increase allowance (%)			4.5			4.5			4.5			4.5
The overall long-term expected interest on assets is 9.7%. This is based on the new IAS19R net interest requirement.
The assumed rates of mortality are determined by reference to the SA85-90 (Light) ultimate table, as published by the Actuarial Society of South Africa, for pre-retirement purposes and the PA(90) ultimate table, minus one year age rating as published by the Institute and Faculty of Actuaries in London and Scotland, for retirement purposes.
Funding level per statutory actuarial valuation (%)			100			100			100			100
The number of employees registered under the Telkom Pension Fund			35			46			35			46
The fund portfolio consists of the following percentages:
Cash (%)			6			15			6			15
Equities (%)			43			39			43			39
Property (%)			4			2			4			2
Bonds (%)			18			16			18			16
Commodities (%)			3			2			3			2
Foreign Investments (%)			26			26			26			26
Total			100			100			100			100

The total estimated contributions to be paid to the pension fund by the employer for the year ending 31 March 2018 is R1 million

The Telkom Retirement Fund
The Telkom Retirement Fund was established on 1 July 1995 as a hybrid defined benefit and defined contribution plan. Existing employees were given the option to either remain in the Telkom Pension Fund or to be transferred to the Telkom Retirement Fund. All pensioners of the Telkom Pension Fund and employees who retired after 1 July 1995 were transferred to the Telkom Retirement Fund. Upon transfer the government ceased to guarantee the deficit in the Telkom Retirement Fund. Subsequent to 1 July 1995 further transfers of existing employees occurred. As from 1 September 2009 all new appointments will belong to the Telkom Retirement Fund but will not be able to retire from the Telkom Retirement Fund at retirement age. These members would be required to purchase their pensions from an insurance company.

The pensioner pool of the Telkom Retirement Fund only consists of pensioners and is funded through a liability driven investment strategy (LDI). Pensioner increases are subject to affordability, targeting between 70% and 100% of CPI.

Telkom guarantees any actuarial shortfall of the pensioner pool in the retirement fund. This liability is initially funded through assets of the retirement fund.

The Telkom Retirement Fund is governed by the Pension Funds Act 24 of 1956. In terms of section 37A of this Act, the pension benefits payable to the pensioners cannot be reduced. If therefore the present value of the funded obligation were to exceed the fair value of plan assets, Telkom would be required to fund the statutory deficit.

The funded status of the Telkom Retirement Fund is disclosed below:

		Group							Company
			2017  Rm			2016  Rm			2017  Rm			2016  Rm
The net periodic retirement costs include the following components:
Interest cost on projected benefit obligations			3 554			3 103			3 554			3 103
Interest on plan assets			(3 461)			(3 067)			(3 461)			(3 067)
Net periodic pension expense recognised in profit and loss			93			36			93			36
The net periodic other comprehensive income includes the following components:
Actuarial gain/(loss) due to financial assumptions			312			(339)			312			(339)
Acturial (loss)/gain due to demographic assumptions			(136)			182			(136)			182
Net periodic pension expense recognised in other comprehensive income			176			(157)			176			(157)
Cumulative actuarial loss			(1 365)			(1 541)			(1 365)			(1 541)
Retirement fund contributions			–			–			–			–
Benefit obligation:
At beginning of year			39 527			43 463			39 527			43 463
Interest cost			3 554			3 103			3 554			3 103
Current service cost			512			660			512			660
Employee contributions			331			322			331			322
Benefits paid			(2 021)			(7 305)			(2 021)			(7 305)
Transfers in			51			4			51			4
Curtailment (gain)/loss			(1 462)			159			(1 462)			159
Actuarial (gain)			(2 088)			(879)			(2 088)			(879)
Benefit obligation at end of year for defined benefit plan			38 404			39 527			38 404			39 527
Plan assets at fair value:
At beginning of year			38 253			42 651			38 253			42 651
Interest on plan assets			3 461			3 067			3 461			3 067
Asset transfer to TRF			96			–			96			–
Employer contributions			481			551			481			551
Employee contributions			280			322			280			322
Benefits paid			(2 021)			(7 305)			(2 021)			(7 305)
Curtailment loss			(1 436)			–			(1 436)			–
Transfers in			51			4			51			4
Actuarial (loss)			(1 912)			(1 037)			(1 912)			(1 037)
Plan assets at end of year			37 253			38 253			37 253			38 253
Present value of funded obligation			38 404			39 527			38 404			39 527
Fair value of plan assets			37 253			38 253			37 253			38 253
Net liability			(1 151)			(1 274)			(1 151)			(1 274)
Interest on plan assets			3 461			3 067			3 461			3 067
Actuarial (loss) on plan assets			(1 912)			(1 037)			(1 912)			(1 037)
Actual return on plan assets			1 549			2 030			1 549			2 030
Plan asset balance comprises of:
Equities			11 921			12 623			11 921			12 623
Property			1 490			1 530			1 490			1 530
Bonds			10 431			11 094			10 431			11 094
Africa
Cash			1 490			1 530			1 490			1 530
Foreign investments			9 313			8 416			9 313			8 416
Total			37 253			38 253			37 253			38 253
Funding arrangements The Telkom Retirement Fund Pensioner portfolio’s strategic asset allocation (SAA) is determined by an asset liability model (ALM) based on the Fund’s unique liabilities, as determined by its member data and Fund rules. The SAA is a reflection of the Fund's targeted post-retirement interest rate (PRI), and the investment strategy is built around the target of providing consistent annual pension increases of between 70% to 100% of CPI.
Included in the fair value of plan assets is:
Telkom shares			16			12			16			12
The Telkom Retirement Fund invests its funds in South Africa and internationally. Twelve fund managers invests in South Africa and five of these managers specialise in trades with bonds on behalf of the Retirement Fund.
Principal actuarial assumptions were as follows:
Assumptions regarding future mortality are based on mortality tables. The current longevities underlying the values of the liabilities in the defined benefit plan are as follows:
Males over 65			16.5			16.4			16.5			16.4
Females over 65			20.6			20.5			20.6			20.5
Discount rate (%)			9.7			9.5			9.7			9.5
Interest on plan assets (%)			9.7			9.5			9.7			9.5
Pension increase allowance (%)			7.0			6.9			7.0			6.9
The assumed rates of mortality are determined by reference to the SA85-90 (Light) ultimate table, as published by the Actuarial Society of South Africa, for pre-retirement purposes and the PA(90) Ultimate table, minus one year age rating as published by the Institute and Faculty of Actuaries in London and Scotland, for retirement purposes.
Funding level per statutory actuarial valuation (%)			100			100			100			100
The number of pensioners registered under the Telkom Retirement Fund			12 887			12 053			12 887			12 053
The number of in-service employees entitled to retire in the Telkom Retirement Fund			12 809			12 508			12 809			12 508
The fund portfolio consists of the following percentages:
Equities (%)			32			33			32			33
Property (%)			4			4			4			4
Bonds (%)			28			29			28			29
Africa (%)			7			8			7			8
Cash (%)			4			4			4			4
Foreign investments (%)			25			22			25			22
Total			100			100			100			100

The total estimated contributions to be paid to the Telkom Retirement Fund by the employer for the year ending 31 March 2018 is R510 million.

Medical benefits
Telkom makes certain contributions to medical funds in respect of current and retired employees. The scheme is a defined benefit plan. The expense in respect of current employees' medical aid is disclosed in note 6.3. The amounts due in respect of post-retirement medical benefits to current and retired employees have been actuarially determined and provided for as set out in note 27. Telkom has terminated future post-retirement medical benefits in respect of employees joining after 1 July 2000.

There are three major categories of members entitled to the post-retirement medical aid: pensioners who retired before 1994 ('Pre-94'); those who retired after 2013; and the in-service members. The pensioners retiring post 2013 and the in-service members' liability are subject to a rand cap, which increases as per the board's approval.

Eligible employees must be employed by Telkom until retirement age to qualify for the post-retirement medical aid benefit. The most recent actuarial valuation of the benefit was performed as at 31 March 2017.

Telkom has allocated certain investments to fund this liability as set out in note 15.2. The annuity policy of the cell captive investment is the medical plan asset. The group is entitled to a refund of the full surplus in the annuity policy once all the beneficiaries have been paid. As such the group has recognised the full asset.

		Group							Company
			2017  Rm			2016  Rm			2017  Rm			2016  Rm
Medical aid
Benefit obligation:
At beginning of year			2 298			2 412			2 270			2 391
Acquisition of BCX			–			4			–			–
Interest cost			205			185			205			183
Service cost			2			6			2			5
Actuarial (gain)			(2)			(129)			(2)			(129)
Curtailment loss*			–			48			–			48
Settlement gain*			–			(19)			–			(19)
Benefits paid from plan assets			(176)			(171)			(176)			(171)
Contributions paid by Telkom*			(39)			(38)			(39)			(38)
Benefit obligation at end of year			2 288			2 298			2 260			2 270
Plan assets at fair value:
At beginning of year			3 002			2 815			3 002			2 815
Interest on plan assets			276			216			276			216
Benefits paid from plan assets			(176)			(171)			(176)			(171)
Actuarial (loss)/gain			(230)			142			(230)			142
Plan assets at end of year			2 872			3 002			2 872			3 002
Present value of funded obligation			2 288			2 298			2 260			2 270
Fair value of plan assets			(2 872)			(3 002)			(2 872)			(3 002)
			(584)			(704)			(612)			(732)
Liability as disclosed in the statement of financial position (refer to note 27)			28			28			–			–
Asset as disclosed in the statement of financial position			(612)			(732)			(612)			(732)
The net periodic other comprehensive income includes the following components:
Acturial gain due to financial assumptions			2			128			2			128
Actuarial (loss)/gain due to demographic assumptions			(230)			143			(230)			143
Net periodic pension expense and income recognised in other comprehensive income			(228)			271			(228)			271
Cumulative actuarial loss			(1 880)			(1 652)			(1 880)			(1 652)
Plan assets at fair value:
Interest on plan assets			276			216			276			216
Actuarial (loss)/gain on plan assets			(230)			142			(230)			142
Actual return on plan assets			46			358			46			358
Plan asset balance comprises of:
Cash and cash equivalents			201			180			201			180
Equity securities			1 235			1 231			1 235			1 231
Bonds			574			540			574			540
Foreign investments			862			1 051			862			1 051
Total			2 872			3 002			2 872			3 002

All equity securities and government bonds have quoted prices in active markets.

Funding arrangements
The general funding arrangements from the plan assets is to maximise long-term capital growth and long-term total return on Telkom's portfolio. The portfolios are managed as a segregated portfolio which includes international investments. The investment objective is to provide an absolute return, measured over a 36-month period, in excess of CPI-X plus 5% per annum. The funding arrangements of the plan assets is driven by designated asset managers to manage Telkom's portfolios by applying a flexible approach, which includes holding equities, property fixed income or money market assets as part of the investment strategy, in variable weightings, at any point in time.

* Refer to note 27.

		Group							Company
			2017			2016			2017			2016
Principal actuarial assumptions were as follows:
Assumptions regarding future mortality are based on mortality tables. The current longevities underlying the values of the liabilities in the defined benefit plan are as follows:
Males over 65			16.5			16.4			16.5			16.4
Females over 65			20.6			20.5			20.6			20.5
Discount rate (%)			9.7			9.5			9.7			9.5
Interest on plan assets (%)			9.7			9.5			9.7			9.5
Salary inflation rate (%)			7.0			6.9			7.0			6.9
Medical inflation rate (%)			9.0			8.9			9.0			8.9
The assumed rates of mortality are determined by reference to the SA85-90 (Light) ultimate table, as published by the Actuarial Society of South Africa, for pre-retirement purposes and the PA(90) ultimate table, minus one year age rating as published by the Institute and Faculty of Actuaries in London and Scotland, for retirement purposes.
Contractual retirement age			65			65			65			65
Average retirement age			60			60			60			60
Number of in-service members			879			944			879			944
Number of pensioners			4 218			4 460			4 218			4 460

Group and company
The valuation results are sensitive to changes in the underlying assumptions. The following table provides an indication of the impact of changing the significant assumptions above:

		Current   assumption			Decrease			Increase
		Rm			Rm			Rm
2017
Medical cost inflation rate		9.0%			(1%)			1%
Benefit obligation		2 260			(130)			147
Percentage change					(5.8%)			6.5%
Service cost and interest cost FY2018		207			(13)			14
Percentage change					(6.3%)			6.8%
Discount rate		9.7%			(0.5%)			0.5%
Benefit obligation		2 260			90			(84)
Percentage change					4.0%			(3.7%)
Service cost and interest cost FY2018		207			11			(12)
Percentage change					5.3%			(5.8%)
Post-retirement mortality rate
Benefit obligation		2 260			104			(101)
Percentage change					4.6%			(4.5%)
Service cost and interest cost FY2018		207			10			(10)
Percentage change					4.8%			(4.8%)
2016
Medical cost inflation rate		8.9%			(1%)			1%
Benefit obligation		2 270			(133)			151
Percentage change					(5.9%)			6.6%
Service cost and interest cost FY2017		188			(13)			14
Percentage change					(6.9%)			7.4%
Discount rate		9.5%			(0.5%)			0.5%
Benefit obligation		2 270			93			(86)
Percentage change					4.1%			3.8%
Service cost and interest cost FY2017		188			1			(13)
Percentage change					6.4%			(6.9%)
Post-retirement mortality rate		PA(90) Ultimate-1			(10%)			10%
Benefit obligation		2 270			(101)			103
Percentage change					(4.4%)			4.5%
Service cost and interest cost FY2017		188			(10)			10
Percentage change					(5.3%)			5.3%

		Group							Company
			2017			2016			2017			2016
The fund portfolio consists of the following percentages:
Equities			43			41			43			41
Bonds			20			18			20			18
Cash and money market investments			7			6			7			6
Foreign investments			30			35			30			35
Total			100			100			100			100

Telephone rebates
Telkom provides telephone rebates to its pensioners who joined prior to 1 August 2009. The most recent actuarial valuation was performed as at 31 March 2017. Eligible employees must be employed by Telkom until retirement age to qualify for the telephone rebates. The scheme is a defined benefit plan.

The status of the telephone rebate liability is disclosed below:

		Group							Company
			2017  Rm			2016  Rm			2017  Rm			2016  Rm
Benefit obligation:
At beginning of year			410			471			410			471
Current service cost			3			4			3			4
Interest cost			37			34			37			34
Actuarial (gain)			(18)			(74)			(18)			(74)
Curtailment loss			–			2			–			2
Benefits paid			(28)			(27)			(28)			(27)
Liability as disclosed in the statement of financial position (refer to note 27)			404			410			404			410
The net periodic other comprehensive income includes the following components:
Acturial gain/(loss) due to demographic assumptions			1			(9)			1			(9)
Actuarial gain due to financial assumptions			17			84			17			84
Net periodic pension income recognised in other comprehensive income			18			75			18			75
Cumulative actuarial gain			18			118			18			118
Sensitivity analysis
Increase in discount rate by 0.5%			(17)			(17)			(17)			(17)
Decrease in discount rate by 0.5%			16			18			16			18
Principal actuarial assumptions were as follows:
Assumptions regarding future mortality are based on mortality tables. The current longevities underlying the values of the liabilities in the defined benefit plan are as follows:
Males over 65			16.5			16.4			16.5			16.4
Females over 65			20.6			20.5			20.6			20.5
Discount rate (%)			9.7			9.5			9.7			9.5
Contractual retirement age			65			65			65			65
Average retirement age			60			60			60			60
The assumed rates of mortality are determined by reference to the standard published mortality table PA (90) Ultimate standard tables, as published by the Institute and Faculty of Actuaries in London and Scotland, rated down one year to value the pensioners.
Number of members			9 235			9 902			9 235			9 902
Number of pensioners			12 722			12 605			12 722			12 605

Telkom Share Plan
Telkom's shareholders approved the Telkom Forfeitable Share Plan (FSP) and the Additional Share Award (ASA) at the September 2013 Annual General Meeting. The fourth grants have occurred under this plan at 31 March 2017.

The FSP is made up of Long-term incentive plan (LTIP) and the Employee Share Ownership Plan (ESOP).

In the FSP employees acquire shareholder rights immediately on the forfeitable shares (these include dividends and voting rights).

Vesting financial year		Grant financial year
			2014			2015			2016			2017
2017 Financial year			50%			–			–			–
2018 Financial year			30%			50%			–			–
2019 Financial year			20%			30%			50%			–
2020 Financial year			–			20%			30%			50%
2021 Financial year			–			–			20%			30%
2022 Financial year			–			–			–			20%

The grant and vesting timelines for the Telkom ESOP are as follows:

Vesting financial year		Grant financial year
			2014			2015			2016			2017
2017 Financial year			100%			–			–			–
2018 Financial year			–			100%			–			–
2019 Financial year			–			–			100%			–
2020 Financial year			–			–			–			100%

Certain BCX employees were granted shares in terms of a BCX share plan. Based on the BCX group achieving the performance condition, the shares will vest between 2018 and 2021 financial year.

Certain Trudon employees were granted shares in terms of a Trudon share plan. Based on Trudon achieving the performance condition, the shares will vest between 2020 and 2022 financial year.

In order for the vesting to occur the targets (including performance conditions) must be met. The targets are measured in each financial year after the grant date. In calculating the expense it is assumed that the probability of meeting the conditions is 100%.

The weighted average remaining vesting period for the shares outstanding as at 31 March 2017 is 1.64 years (2016: 1.8 years).

		Group							Company
			2017			2016			2017			2016
The following table illustrates the movement of the maximum number of shares that were granted to employees for the 2016 and 2017 grant:
Beginning of the year			8 876 772			10 936 829			8 876 772			10 936 829
Vested shares during the year			(1 502 627)			(1 015 347)			(1 502 627)			(1 015 347)
Forfeited shares during the year			(3 515 502)			(5 634 646)			(3 429 367)			(5 634 646)
Granted during the year			6 166 137			4 589 936			4 886 087			4 589 936
Outstanding at end of the year			10 024 780			8 876 772			8 830 865			8 876 772

The fair value of the shares granted have been calculated by an actuary using the Black-Scholes-Merton model and the following values at grant date.

Group and company

BCX

Trudon

Grant 4

Grant 3

Grant 2

Grant 1

Market share price ( R)

70.82

55.50

65.00

64.31

76.11

27.30

Dividend yield (%)

–

–

–

–

–

–

Share price volatility

35% p.a

35% p.a

35% p.a

35% p.a

35% p.a

35% p.a

Future risk free interest rate

8.5% p.a

8.5% p.a

8.5% p.a

8% p.a

6.7% p.a

8.5% p.a

		Group							Company
			2017			2016			2017			2016
The principal assumptions used in calculating the expected number of shares that will vest are as follows:
Employee turnover (%)			2.19			2.66			2.19			2.66
Meeting specified performance criteria (%)			100			100			100			100

The key performance indicators for the first grant are free cash flow targets and net promoter score targets. The second grant key indicators are headline earnings per share, free cash flow, return on equity and total shareholder return.