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Value creation
Our business model

Financial
capital

The financial capital available to maintain and grow our business includes cash from sales, the financial resources we obtain from equity, and debt funding.

Social and
relationship
capital

Our social and relationship capital reflects our contribution to society. This is through our corporate social responsibility investments in the communities in which we operate and the relationships we have, which are central to our business.

Intellectual
capital

Our intellectual capital includes the intangible assets associated with our brand, our legal licences to operate, our collective expertise and processes, and the strategies, policies, procedures, standards and codes that govern how we do business.

Human
capital

Our people’s individual skills, competencies, experience, motivation to innovate and be productive, and their health and well-being all contribute to our human capital. Our people create value and make it possible for us to deliver against our strategic objectives.

Productive
capital

Our productive capital consists of:

  • our network, which includes copper and fibre-optic cables (terrestrial and submarine) that support fixed-line services to our retail, business and wholesale customers;
  • three major earth stations providing satellite services to Africa;
  • towers that transmit our radio spectrum and support the delivery of our mobile voice and data services; and
  • data centres that provide hosting, disaster recovery services and cloud services to our business customers.

Natural
capital

Our natural capital includes natural resources which comprise renewable and non-renewable resources and processes. To minimise our impact on the environment, we apply international best practice, comply with laws, and maintain our environmental and social licences to operate.

Input

Financial
capital

  • Equity invested (by shareholders)
  • Retained earnings
  • Debt funding
  • Cash generated from operations

Social and
relationship
capital

  • The Telkom Foundation
  • FutureMakers programme
  • Stakeholder engagement activities
  • Reputation management
  • Telkom BCoE and values are the foundation of our business
  • Partnerships with IT application providers

Intellectual
capital

  • Recognisable brands such as Telkom, BCX, Openserve, Gyro and Yellow Pages
  • Rights and licences such as:
    • licences to provide electronic communication networks and
    • licences to use spectrum
  • Research and development
  • Internal policies, procedures and frameworks such as Telkom’s governance framework, enterprise risk management (ERM) framework, and environmental management systems, with the aim of maintaining compliance and internal control

Human
capital

  • 18 286 employees (FY2017: 18 847)
  • Employee remuneration policies and structures that aim to attract and retain the required skills
  • Experienced and skilled leadership
  • Training programmes
  • Talent management and succession planning programmes
  • Employee Wellness programmes
  • Group culture

Productive
capital

  • Network footprint including mobile, wireless, fixed lines (fibre and copper), national backhaul (connectivity of base stations), etc
  • Base stations, mast and towers, fixed-line exchange, etc
  • Telkom, through Gyro, has 6 500 mast and tower passive infrastructure. The property portfolio consists of more than 1 400 properties, most of which accommodate exchange and switch equipment.
  • Spectrum
  • Data centres
  • Office and retail buildings

Natural
capital

  • Electricity
  • Water
  • Copper
  • Timber

Business activities

1
Planning, building and maintaining infrastructure

Network planning is the basis from which infrastructure is developed, expanded, improved and maintained. Various permits, assessments, commercial negotiations, and compliance to regulations, among others, are required within this process.

2
Connecting customers

This follows a value chain:

Customer request received online, through contact centre or at retail facility

Infrastructure confirmed
(if applicable)

Technician dispatched
(if applicable)

Service activated/product provided

Telkom provides mobile and fibre solutions through third parties who are paid commission for reselling Telkom’s products and services.

Client billing process

3
Providing solutions/
infrastructure to corporates

The value chain for these solutions will depend on the nature of the request, but typically follows the process below.

Customer request received directly or through tender request

Either a standard solution or a new, customer-specific solution is developed

Tender awarded/solution approved

Build, implement and activate solution

Client billing process

Maintenance/continuous support

Telkom’s enabling and support functions play an important role in building a sustainable business.
  • Regulatory
  • Human resources
  • Finance
  • Procurement
  • Marketing and sales
  • Strategy
  • Reputation management
  • IT
  • Corporate social responsibility
  • Legal and compliance

Outputs

Connectivity

Telkom supplies broadband data) and narrow band (voice) connectivity to wholesalers, large companies and residential users through fixed-line (copper and fibre), mobile and wireless transmission.

Infrastructure

Gyro provides innovative property and tower solutions to Telkom and third-party clients.

Network
elements

This allows wholesale customers to connect their own customers.

Converged
ICT solutions

Provision of ICT products and solutions for our enterprise customers.

Electronic
advertising
and media

This includes the Yellow Pages, White Pages and advertisements.


 

These products and services are provided by Telkom’s five business units:

Openserve Telkom Consumer BCX Gyro Yellow Pages  

Our most significant and environmentally impactful waste streams, internally and within the value chain, are cabling (copper and fibre-optic) and e-waste (batteries and electronic equipment), refer to
page 83 for further details.

 
  Connectivity
  Infrastructure    
  Network elements      
  Converged ICT solutions    
  Electronic advertising and media      

Outcomes

Financial
capital

  • Operating profit of R4 939 million (FY2017: R5 280 million) of which R3 158 million (FY2017: R3 907 million) was retained for future growth (retained earnings)
  • Cash generated from operations of R10 171 million (FY2017: R8 910 million)
  • Annual dividend of 355 cents per share (FY2017: 422 cents per share)
  • Repayment of debt (R4 685 million) and interest paid (R731 million)

Social and
relationship
capital

  • Education initiatives through the Telkom Foundation
    • R41 million invested (FY2017: R32 million)
    • 129 teachers trained (FY2017: 660 teachers)
  • Small business development through the FutureMakers programme
    • R147 million invested (FY2017: R106 million)
    • 43 black-owned businesses through our Independent Field Technician programme, which in turn created 679 technician jobs, since inception in 2016
    • 1 604 new jobs created
  • R26 759 million in procurement opportunities was accessed by black-owned small businesses

Intellectual
capital

  • Telkom’s improved ICT solutions give us the ability to provide converged solutions to customers and improve customer knowledge to upsell products and services
  • Compliance with licence requirements and other laws and regula

Human
capital

  • 94 percent of senior roles with emergency succession coverage (FY2017: 96 percent)
  • R10 917 million (FY2017: R10 496 million) to employees in remuneration and benefits
  • Employee turnover rate of 6.47 percent (FY2017: 5.97 percent)
  • Bright Young Minds recruitment and Female Leadership Development programme (FLDP)
  • Investment in employee training and development

Productive
capital

  • 30.2 percent increase in active mobile subscriber base to 5.2 million
  • 37.5 percent increase in mobile broadband subscribers to 3.6 million
  • Openserve has an openaccess model which provides Telkom with a competitive advantage
  • Passed more than 2.5 million premises with fibre
  • 109 336 homes connected with fibre (connectivity rate: 30.7 percent)
  • 6 791 fibre to the base stations
  • 89 818 fibre to the business end points terminating
  • More than 157 400 kilometres of fibre deployed to date

Natural
capital

  • Total carbon footprint decreased by 9 percent to 621 651 tCO2e
  • Progress against environmental management programmes to reduce water and electricity usage, including increasing the use of renewable energy