In terms of the Companies Act and the common law, a Director must exercise his or her powers and perform his or her functions in good faith, for a proper purpose, and in the Group’s best interest. This exercise of power must be carried out with a degree of care, skill and diligence.
The Board had a combination of scheduled and special meetings. The special meetings were necessitated by urgent matters such as potential transaction activities. Some of the Board’s key focus areas are set out below.
The Board and its Committees are satisfied that their fiduciary duties and responsibilities, as recorded in the charter and respective terms of reference, were duly fulfilled.
Further, the Board confirms that it is operating in conformity with the applicable provisions of the Companies Act and its MOI.
In addition, the Group continues to progress in its ESG journey. Refer to Our ESG strategy and the TCFD-aligned disclosures.
Strategic pillar
|
P
|
Partnerships |
|
I
|
Integrated solutions |
|
V
|
Victory in broadband |
|
O
|
Operational efficiency |
|
T
|
Technology innovation |
ESG
|
DS
|
Digital services |
|
DP
|
Digital planet |
|
OE
|
Operational efficiencies |
Capitals Impacted
|
FC
|
Financial capital |
|
PC
|
Productive capital |
|
HC
|
Human capital |
|
SRC
|
Social and relationship capital |
|
NC
|
Natural capital |
| The Board approved the decision to dispose of Telkom’s masts and towers business housed in Swiftnet, to unlock value in Telkom. A competitive disposal process was initiated in terms of the Value Unlock Strategy, and Telkom began exclusive negotiations with a preferred bidder in respect of the potential disposal. The Board and management invested significant time and energy to close the transaction. The Board recommended the disposal to the shareholders for approval at a general meeting held on 24 May 2024, and the recommendation was duly approved. The disposal remains subject to the fulfilment or waiver, if applicable, of the remaining suspensive conditions as set out in the circular. (See An interview with the Group Chief Executive Officer for more details.) | The Board considered and approved the Sinosure ECA Funding insurance together with the associated commercial terms, to reduce the cost of funding goods and services procured by our Consumer business. | The Board considered Project Transformation, which seeks to drive capital efficiency, promote and drive operational synergies, and exploit the right to win. |
PC
FC
HC
SRC
P
|
||
| The Board considered an update on the energy strategy and how Telkom responds from a tactical and strategic perspective to keep the lights on. Read more in the Natural capital chapter. | The Board considered the socio-economic outlook from a global and local perspective, as well as the South African economic outlook, to build business resilience against long-term socio-economic headwinds. | The Board was updated on the procurement governance and control transformation journey and the results of an in-depth control assessment in the procure-to-pay value chain. There were notable improvements between FY2019 and FY2023. |
NC
FC
SRC
O
OE
|
||
| The Board considered Non-executive Director succession planning, as detailed on Board and Exco succession planning. | The Board considered the succession of executive management. The Board appointed Ms Nonkululeko Dlamini as the GCFO. Mr Dirk Reyneke, the previous GCFO, was subsequently appointed as the Chief Capital Projects Officer. Mr Reyneke will oversee the next phase of the Group-wide return on invested capital (ROIC) model implementation and ensure a seamless transition to the GCFO role for Ms Dlamini. |
HC
SRC
O
DS
|
|||
| The Board engaged with management on various initiatives to increase revenue and drive growth. Revenue grew by 1.6%, driven by good growth in Telkom Mobile revenues and Openserve next‑generation network revenues. | The increased revenue was accompanied by growth in EBITDA, PAT and FCF. This was achieved despite a reduced capex budget, and speaks to our renewed focus on improving capital efficiency and better utilising Telkom’s assets. |
FC
P
I
V
O
T
DS
DP
|
|||
| The Board acknowledges that the local environment remained challenging on the back of low economic growth and loadshedding. Despite this, Telkom continued to grow market share in the mobile and fibre market segments. | In
FY2024, Randall Abraham was appointed as the Group Executive: Digital
Solutions. The new position of Group Chief Digital Officer was appointed
on
1 April 2024 to drive Telkom’s digital transformation. These actions will enhance Telkom’s ability to adapt to the ever-changing competitive landscape. |
FC
PC
V
I
|
|||
| Telkom is re-evaluating its role in the highly competitive financial services area and looking for ways of bolstering our success in airtime advance and device insurance. | The exclusive partnership between BCX and Alibaba Cloud holds great potential for BCX to expand into new service offerings and may open new markets in the rest of Africa. |
FC
SRC
P
I
V
|
|||
The Company continued to engage with the SIU as per the provisions of Government Gazette No. 11385, published on 25 January 2022, giving the SIU authority to investigate several matters.
On 19 July 2023, the Pretoria High Court set aside Presidential Proclamation 49 of 2022. The Court declared the Proclamation unconstitutional, invalid and of no force or effect, and awarded costs to Telkom.
On 11 December 2023, the High Court granted the President and the SIU leave to appeal to the Supreme Court of Appeal. The matter is pending before the Supreme Court of Appeal. Further details will be provided as they become available.
The Board has seven Committees, including the newly constituted Technology Committee. Each Committee is guided by its respective terms of reference. In terms of the approved charter and terms of reference, the Board and its Committees may invite external advisors and any executive management members to its meetings, should the need arise.
The Chairperson and Members of each Committee are set out on the pages that follow.
We review the Board charter and Committees’ terms of reference annually, or as and when required, for adequacy and effectiveness. We align them to best practice principles in terms of King IV and the JSE Listings Requirements. The Board approved the revised Board charter and the Committees’ terms of reference for FY2025 in March 2024.
The Board charter and each Committee’s terms of reference are available at https://group.telkom. co.za/governance/governance.html. The number of meetings and their attendance are set out on Board and Committee meeting attendance.
The summary of the King IV disclosures is available at https://group.telkom.co.za/ir/financial-information.html..
MG
Qhena
Chairperson
Members:
EG Matenge-Sebesho,
M
Nyati*,
IO Selele,
B Kennedy**
* Resigned
6 September 2023.
** Appointed
1 April 2024.
The Nominations Committee is responsible for reviewing and making recommendations to the Board on most governance-related matters, particularly the nomination and composition of the Board and Committees, including all aspects of diversity.
The Committee works closely with the Remuneration Committee on succession planning for Executive Directors and critical roles.
Composition
The Committee is led by the Board Chairperson, Mr MG Qhena, and comprises Independent Non‑executive Directors. The Committee Members collectively are adequately skilled and possessed the appropriate skills and experience required to discharge their duties in FY2024.
Permanent Invitees: GCEO
The GCFO and the Chief HR Officer attend by invitation, as and when required.
Over and above its standard activities, the Committee considered and/or approved the following key matters:
KA
Rayner
Chairperson
Members:
N Ford-Hoon*,
PCS Luthuli,
KP Lebina,
H Singh,
LL Von Zeuner
* Resigned 6 September 2023.
The Audit Committee is pivotal in ensuring that the Group has effective corporate governance mechanisms and frameworks in place, and that these align with all corporate governance requirements and benchmarks. It assists the Board in overseeing the quality and integrity of the Group’s integrated reporting (including its ESG elements), all financial statements (including the consolidated Group financial statements, interim and year‑end) and public announcements in respect of the financial results.
Further, it assesses the integrity and effectiveness of the accounting, financial, compliance and other control systems.
Composition
The Committee is led by Mr K Rayner and comprises Independent Non-executive Directors who all satisfied the requirements of section 94(1) of the Companies Act and King IV. The Chairperson of the Risk Committee is a cross-member on the Audit Committee.
The Committee Members collectively are adequately skilled and possessed the appropriate financial skills, expertise and experience required to discharge their duties in FY2024.
Permanent Invitees: GCFO, GCEO, Group Executive: Internal Audit, Group Executive: Regulatory and Legal, external auditors
Over and above its standard activities, the Committee considered and/or approved the following key matters:
For more details on the Committee’s activities, refer to its report in the annual financial statements available online.
Also refer to the Financial capital report.
PCS
Luthuli
Chairperson
Members:
O Ighodaro,
KP Lebina,
KA Rayner,
S Taukobong,
S Yoon,
B Kennedy
The Investment and Transactions Committee deals with any significant investment or transaction relating to acquisition and/or disposal of any assets. This includes any equity injection or possible merger or acquisition approved by the Board.
It ensures that post‑merger integration plans for approved transactions are adequate. It monitors the performance of investments against the original investment criteria and pre-investment assumptions through formal post-acquisition reviews.
Composition
The Committee is led by Mr PCS Luthuli and comprises Independent Non‑executive Directors and Executive Directors. The Committee Members collectively are adequately skilled and possessed the appropriate skills and experience required to discharge their duties in FY2024.
Permanent Invitees: GCEO, GCFO, Group Executive: Mergers and Acquisitions
Over and above its standard activities, the Committee considered and/or approved the following key matters:
B
Kennedy
Chairperson
Members:
O Ighodaro,
M Nyati*,
LL Von Zeuner,
MG Qhena
* Resigned 29 September 2023.
The Remuneration Committee sets the Group’s remuneration policy on behalf of the Board. The policy aims to ensure that competitive reward strategies and programmes are in place to facilitate the recruitment, motivation and retention of high-performance employees at all levels in support of realising the Group’s strategy.
The Committee oversees remuneration for Executive Directors and senior executives. It monitors the execution of the remuneration policy for the Group, including Non‑executive Directors, and makes recommendations on all human capital matters related to the Group’s restructuring.
Composition
The Committee is led by Mr B Kennedy and comprises Independent Non‑executive Directors. The Committee Members collectively are adequately skilled and possessed the appropriate skills and experience required to discharge their duties in FY2024.
Permanent Invitees: GCFO, GCEO, Chief HR Officer, Group Executive: Remuneration and Performance Management
Over and above its standard activities, the Committee considered and/or approved the following key matters:
Refer to the standalone remuneration report online, and the Remuneration report summary for more details on the Committee’s focus areas.
LL Von
Zeuner
Chairperson
Members:
N Ford-Hoon*,
EG Matenge-Sebesho,
KA Rayner,
SP Sibisi,
H Singh,
S Yoon
* Resigned
24 August 2022.
The Risk Committee assists the Board in ensuring the quality, integrity and reliability of the Group’s risk management. Telkom has an effective risk management process that identifies and monitors the management of the Group’s key, transversal, and IT-related cybersecurity risks.
The Committee oversees ESG risks linked to the ESG strategy and its implementation. The Committee also oversees and monitors governance risks through the Group’s ERM framework and its system of internal controls. Cybersecurity, IT governance and technology and information-related activities which previously formed part of the Committee’s mandate have been moved to the Technology Committee.
Composition
The Committee is led by Mr L Von Zeuner and comprises Independent Non‑executive Directors. The Chairperson of the Audit Committee is a cross-member on the Risk Committee.
The Committee Members collectively are adequately skilled and possessed the appropriate skills and experience required to discharge their duties in FY2024.
Permanent Invitees: GCFO, GCEO, Group Executive: Internal Audit, Group Executive: Regulatory and Legal, Group Executive: ERM, Security and Forensics, external auditors
Over and above its standard activities, the Committee considered and/or approved the following key matters:
Refer to Managing risks and compliance for ERM and compliance and Our ESG strategy ‑ Governance for technology and information governance.
EG
Matenge-Sebesho*
Chairperson
Members:
B Kennedy,
IO Selele,
SP Sibisi,
S Taukobong,
D Reyneke**,
N Dlamini*
* Appointed 1 December 2023.
** Resigned 30 November 2023.
The Social and Ethics Committee is a statutory Board Committee per the provisions of the Companies Act. Its activities cover environment, social, governance and ethics-related matters.
Composition
The Committee is led by Ms EG Matenge‑Sebesho and comprises Independent Non‑executive Directors and Executive Directors, in line with the King IV recommendation. The Committee Members collectively are adequately skilled and possessed the appropriate skills and experience required to discharge their duties in FY2024.
Permanent Invitees: Chief HR Officer
Over and above its standard activities, the Committee considered and/or approved the following key matters:
For more details on the Committee’s activities, refer to its Social and Ethics Committee report.
Prof
H Singh
Chairperson
Members:
Dr SP Sibisi,
IO Selele,
LL Von Zeuner,
KA Rayner,
PCS Luthuli
The Technology Committee was constituted by the Board in March 2024. The Committee’s primary purpose is to assist the Board with oversight of technology and innovation strategies, plans and operations related to information security, cybersecurity, data privacy and third-party technology strategies.
Composition
The Committee is led by Prof H Singh and comprises Independent Non‑executive Directors. The Committee members are collectively adequately skilled and possess the appropriate skills and experience required to discharge their duties.
Permanent Invitees: Chief Digital Officer, GCEO, GCFO
There were no meetings in the year under review.
| Board | Audit Committee |
Remuneration Committee |
Nominations Committee |
Investment
and Transactions Committee |
Social
and Ethics Committee |
Risk Committee |
Joint
Audit and Social and Ethics Committees |
Joint
Audit and ITC |
|
| Independent Non-executive Directors | |||||||||
| MG Qhena | 9/9 | 8/8 | 6/6 | ||||||
| EG Matenge-Sebesho | 9/9 | 6/6 | 4/4 | 4/4 | 1/1 | ||||
| B Kennedy | 9/9 | 8/8 | 8/8 | 4/4 | 1/1 | ||||
| H Singh | 9/9 | 5/5 | 4/4 | 1/1 | 1/1 | ||||
| KP Lebina | 9/9 | 5/5 | 8/8 | 1/1 | 1/1 | ||||
| PCS Luthuli | 9/9 | 5/5 | 8/8 | 1/1 | 1/1 | ||||
| IO Selele | 9/9 | 5/61 | 4/4 | ||||||
| KA Rayner | 9/9 | 5/5 | 8/8 | 4/4 | 1/1 | 1/1 | |||
| LL Von Zeuner | 9/9 | 5/5 | 7/8 | 4/4 | 1/1 | ||||
| O Ighodaro | 9/9 | 8/8 | 8/8 | 1/1 | |||||
| SP Sibisi | 9/9 | 3/41 | 4/4 | 1/1 | |||||
| S Yoon | 9/9 | 8/8 | 4/4 | 1/1 | |||||
| M Nyati | 3/52 | 5/6 | 2/31,2 | ||||||
| N Ford-Hoon | 2/52 | 3/42 | 2/22 | ||||||
| Executive Directors | |||||||||
| S Taukobong | 9/9 | 5/5 | 8/8 | 6/6 | 8/8 | 4/4 | 4/4 | 1/1 | 1/1 |
| DJ Reyneke | 5/54 | 4/44 | 7/7 | – | 5/54 | 2/31,4 | 3/34 | 1/14 | |
| NS Dlamini | 4/4 | 1/13 | 1/13 | – | 3/3 | 1/1 | 1/13 | 0/03 | 1/1 |
| 1 | Apology (includes unscheduled meetings). |
| 2 | N Ford-Hoon and M Nyati resigned from the Board on 6 September 2023 and 29 September 2023, respectively. |
| 3 | NS Dlamini was appointed to the Board on 1 December 2023. |
| 4 | DJ Reyneke resigned as an Executive Director from 30 November 2023. |
Joint meetings are scheduled in certain instances between various Committees to deliberate on common interests, such as the draft integrated report and draft business plans. Special meetings are convened if matters arise outside of the annual work plan that warrant urgent consideration. The Committees convened these special meetings to engage on various matters, including the SIU investigation, potential transactions, and succession planning activities for the Board.
Telkom adopts a combined assurance approach to align and optimise assurance-related activities across the Group, together with the various assurance providers, as described in the combined assurance framework. The framework articulates the minimum requirements for establishing combined assurance in the Group. These include providing a co-ordinated approach, accountability, and direction to all assurance activities in terms of implementing and executing combined assurance.
The combined assurance model aims to align and integrate all assurance services and functions so that these can work in unison. This will enable an effective control environment, maintain the integrity of information used for decision-making, and support the integrity of Telkom’s external reports and underlying statements.
The Board, through the Audit Committee (supported by the Risk Committee), oversees the implementation of the combined assurance model and its effectiveness. It ensures that the scope of combined assurance is informed by the key principal risks and opportunities that materially affect the Group’s ability to create value.
The lines of assurance consist of Telkom’s business units, functional areas, and internal and external assurance providers. Collectively, they are responsible for implementing and reporting on the combined assurance mandate in a co‑ordinated way to ensure its effectiveness. To enable this, assurance forums were set up and operated during the year. Our regulators (e.g. ICASA and the Competition Commission) may institute reviews to gain assurance that Telkom complies with applicable laws and regulations.
Telkom Group Internal Audit (TGIA or internal audit), in collaboration with Telkom ERM, leads the co-ordination and facilitation of the Group’s combined assurance efforts across the lines of assurance. It aligns its assurance activities with the other assurance providers, including the external auditors, so that Telkom’s significant risks are adequately covered and managed. We aim to keep enhancing the Group’s combined assurance activities, and the Audit Committee is satisfied with the effectiveness of the combined assurance arrangements.
The combined assurance framework is outlined in the diagram below:
| Legend | |
|
Accountability and reporting |
|
Delegation, direction, resource and oversight |
|
Alignment, communication, co-ordination and collaboration |
TGIA is a Group-wide function that provides independent and objective assurance and consulting services to add value and enhance Telkom’s operations. TGIA is guided by the Telkom Group Internal Audit charter. It sets out the terms of reference for internal audit activity. The charter also serves as a basis for the governance of the internal audit activity necessary for TGIA to fulfil its role and to meet the performance criteria set by the Board and Audit Committee. The internal audit charter was updated and approved at the November 2023 Audit Committee meeting.
The Chief Audit Executive reports functionally to the Audit Committee Chairperson, and administratively to the GCFO. The Chief Audit Executive attends Audit and Risk Committee meetings and is a standard invitee to Group Exco meetings or other Committee meetings, comprising mostly senior executives. This structure promotes the independence of internal audit and the accomplishment of its responsibilities.
TGIA subscribes to a risk-based audit methodology in developing its annual audit plan. It aligns the plan with the Group’s strategic risks, considering any opportunities and challenges in the respective operating environments. TGIA provides support to all business units in achieving their strategic objectives. It also collaborates with other assurance providers to continually enhance its combined assurance efforts.
The Audit Committee approves the audit plan annually. TGIA reviews and revises the plan quarterly, as relevant, to align with key business priorities and changes in the business and risk environment. All changes to the plan are tabled with the Audit Committee for approval.
In FY2024, TGIA executed its internal audit plan and prepared the plan for the new financial year. TGIA followed a systematic approach to evaluate and enhance the effectiveness of governance, risk management and internal control processes within the Group. It provided assurance to the Group’s stakeholders by:
TGIA also conducts ongoing internal quality assessments. TGIA is subjected to an external quality assurance review at least once every five years. In FY2022, an external review was performed by the Institute of Internal Auditors South Africa (IIASA). The review confirmed that TGIA conforms with the International Standards for the Professional Practice of Internal Auditing (ISPPIA) and performs its services effectively. TGIA achieved the highest ratings of “Generally Conforms” and “Generally Effective”.