6 Operating expenses		Group							Company
			2017 Rm			Restated 2016 Rm			2017 Rm			Restated 2016 Rm
6.1 Payments to other operators			2 618			2 793			2 627			2 813
Payments to other operators decreased mainly due to the lower traffic volumes.
6.2 Cost of sales			6 498			5 011			3 669			3 100
The increase in cost of sales is largely attributable to the increase of IT services, 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 2.5 for other group restatements.
6.3 Employee expenses			10 562			12 165			6 530			10 105
Salaries and wages			8 225			7 942			5 032			6 129
Medical aid contributions			24			17			–			–
Subsidiaries' retirement contributions: Defined contribution plan			151			44			–			–
Post-retirement pension and retirement fund (refer to note 29)			572			856			572			856
Current service cost			84			112			84			112
Employer contribution - Service cost			431			551			431			551
Interest cost			3 565			3 113			3 565			3 113
Interest on plan assets			(3 483)			(3 079)			(3 483)			(3 079)
Curtailment (gain)/loss - Telkom Retirement Fund***			(25)			159			(25)			159
Post-retirement medical aid (refer to notes 27 and 29)			(99)			26			(101)			23
Current service cost			2			6			2			5
Interest cost			207			185			205			183
Settlement (gain)/loss**			(32)			3			(32)			3
Interest on plan asset			(276)			(216)			(216)			(216)
Curtailment loss			–			48			–			48
Post-retirement telephone rebates (refer to notes 27 and 29)			40			40			40			40
Current service cost			3			4			3			4
Interest cost			37			34			37			34
Curtailment loss			–			2			–			2
Share-based compensation expense (refer to note 23)			222			115			201			115
Other benefits*			2 031			3 586			1 390			3 403
Employee expenses capitalised			(604)			(461)			(604)			(461)

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.

*	Other benefits include, amongst others, skills development, annual leave, performance incentive, service bonuses, voluntary employee severance/voluntary early retirement packages costs and termination benefits.
**	The current year relate to the refund.
***	Due to the VSP/VERP process."

Change in comparatives

Refer to note 2.5.

		Group							Company
			2017 Rm			Restated 2016 Rm			2017 Rm			Restated 2016 Rm
6.4 Selling, general and administrative expenses			7 237			5 796			6 469			5 600
Selling and administrative expenses			2 337			1 611			922			827
Maintenance			3 620			3 050			4 449			3 689
Marketing			817			824			738			765
Impairment of receivables			463			311			360			319
The increase in selling, general and administrative expenses is mainly due to the full year inclusion of BCX and increases in outsourcing costs.
Change in comparatives
Refer to note 2.5.
6.5 Service fees			2 869			2 965			2 492			2 792
Facilities and property management			1 842			1 704			1 480			1 518
Consultancy, security and other services			966			1 197			955			1 226
Auditors' remuneration			61			64			57			48
The decrease is mainly due to lower company transformation and property management expenses.
Change in comparatives
Refer to note 2.5.
6.6 Operating leases*			1 045			1 100			861			980
Land and buildings			550			607			525			508
Transmission and data lines			159			17			–			–
Equipment			31			50			31			47
Vehicles			305			426			305			425
The decrease in operating leases is mainly attributable to a decrease in the number of vehicles leased.
Change in comparatives
Refer to note 2.5.
6.7 Depreciation, amortisation, impairment, write-offs and losses			5 661			5 498			5 229			5 274
Depreciation of property, plant and equipment			4 752			4 448			4 458			4 305
Amortisation of intangible assets			766			880			628			799
Write-offs, impairments and losses of property, plant and equipment and intangible assets			143			170			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 asset write-offs.
Change in comparatives
Refer to note 2.5.
The estimated useful lives assigned to groups of property, plant and equipment are:			Years						Years
Freehold buildings			10 to 50			10 to 50			10 to 50			10 to 50
Leasehold buildings			–			–			–			–
Network equipment
Cables			4 to 30			4 to 30			4 to 30			4 to 30
Switching equipment			5 to 18			5 to 18			5 to 18			5 to 18
Transmission equipment			5 to 18			5 to 18			5 to 18			5 to 18
Other			2 to 20			2 to 20			2 to 20			2 to 18
Support equipment			3 to 13			3 to 13			5 to 13			5 to 13
Furniture and office equipment			1 to 15			1 to 15			11 to 15			11 to 15
Data processing equipment and software			1 to 10			1 to 10			5 to 10			5 to 10
Telkom support services equipment			1 to 20			1 to 20			1 to 20			2 to 20
The expected useful lives assigned to intangible assets are:
Software and licences			2 to 11			2 to 11			5 to 10			5 to 10
Trademarks, copyrights and other			3 to 13			3 to 13			4 to 13			4 to 13

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.