Notes to the financial statements | Note 3.1

3. Performance
3.1 Segment information
 

The Group Executive Committee (Exco) is the Group's chief operating decision maker (CODM). Management has determined the operating segments based on the reports reviewed by Exco that are used to make strategic decisions, allocate resources and assess performance of each reportable segment.

The operating segments' classification is based on the business units through which Telkom provides communications products and services via its customer-facing units: Telkom Consumer and Small and Medium Business (SMB), as well as its subsidiaries, BCX, Openserve and Gyro. The customer-facing units are supported by the Corporate Centre.

The reportable segments have been determined as Openserve, Telkom Consumer, BCX, Gyro and "Other". The SMB segment has been aggregated into the Telkom Consumer segment. The aggregation is based on the similarity in the nature of products and services. SMB's customers include primarily sole proprietors and customers who typically consume simple products and are similar to the product nature and customer profiling within the Telkom Consumer segment. A large portion of the SMB customer base makes use of the Telkom stores channel which is the same channel as that of the Telkom Consumer customers.

The CODM reviews the performance of the operating segments on an EBITDA basis. EBITDA is adjusted for significant non-recurring items such as restructuring, when applicable. The prior year EBITDA has been normalised for restructuring costs of R1 065 million.

EBITDA is defined as earnings before investment income and finance cost (which includes gains and losses on foreign exchange transactions), tax, depreciation, amortisation and write-offs, impairments and losses of property, plant and equipment and intangible assets, and is also presented inclusive of the following items:

  • Interest revenue; and
  • Interest on overdue accounts.

Interest revenue is included in operating revenue as a separate component of revenue.

Swiftnet forms part of the Gyro segment. In the current year, Swiftnet has been classified as a non-current asset held for sale and presented as a discontinued operation in the Group statement of profit or loss and other comprehensive income. The difference on financial statement line items between the segment and the statement of profit or loss and other comprehensive income relates to Swiftnet. Refer to note 12.2 for details.

March 2024  Openserve 
Rm 		 Telkom  Consumer 
Rm 		 BCX 
Rm 		 Gyro 
Rm 		 Other 
Rm 		 Eliminations 
Rm 		 IFRS 16 
reversal 
Rm 		 Consolidated 
Rm 
Revenue from external customers1, 3  4 526  26 140  11 779  785  –  –  –  43 230 
Revenue from contracts with customers recognised over time3  4 072  22 525  9 259  –  –  –  –  35 856 
  Voice  –  5 244  2 023  –  –  –  –  7 267 
  Interconnection  247  526  –  –  –  –  –  773 
  Data  3 825  16 178  2 586  –  –  –  –  22 589 
  Information technology services3  –  –  3 833  –  –  –  –  3 833 
  Customer premises equipment related services  –  96  753  –  –  –  –  849 
  Interest revenue  –  314  64  –  –  –  –  378 
  Sundry revenue  –  167  –  –  –  –  –  167 
Revenue from contracts with customers recognised at a point in time3  327  3 334  2 520  –  –  –  –  6 181 
  Customer premises equipment  –  3 301  276  –  –  –  –  3 577 
  Information technology hardware and software3  –  –  2 244  –  –  –  –  2 244 
  Sundry revenue  327  33  –  –  –  –  –  360 
Lease revenue  127  –  –  785  –  –  –  912 
Insurance revenue  –  281  –  –  –  –  –  281 
Intersegmental operating revenue3  7 985  189  1 136  699  219  (9 578) (650) – 
Other income  262  721  62  20  1 031  (1 201) –  895 
Total expenses  (8 839) (22 957) (11 683) (418) (966) 10 779  –  (34 084)
  Cost of handsets, equipment, software and directories  –  (3 867) (2 361) –  –  103  –  (6 125)
  Sales commission, incentives and logistical costs  –  (2 748) –  –  –  –  –  (2 748)
  Payments to other operators  (736) (2 664) (380) –  –  452  –  (3 328)
  Insurance service expense  –  (185) –  –  –  –  –  (185)
  Employee expenses  (2 851) (1 111) (3 432) (123) (378) –  –  (7 895)
  Other expenses  (292) (6 452) (3 674) (36) (229) 8 488  –  (2 195)
  Maintenance  (2 034) (2 520) (1 102) (32) (79) 923  –  (4 844)
  Marketing  (33) (672) (117) –  (7) –  –  (829)
  Impairment of receivables, contract assets and loans  (73) (1 445) (161) 6  (11) –  –  (1 684)
  Service fees  (2 636) (1 188) (432) (229) (209) 693  –  (4 001)
  Lease-related expenses  (184) (105) (24) (4) (53) 120  –  (250)
EBITDA for reportable segments including intersegmental transactions  3 934  4 093  1 294  1 086  284  –  (650) 10 041 
Depreciation, amortisation, impairments and write-offs                       (5 561)
Operating profit                       4 480 
Investment income                       253 
Net finance charges, hedging costs and fair value movements                       (2 197)
Profit before taxation                       2 536 
Other segment information                         
Capital expenditure of property, plant and equipment and intangible assets  2 547  2 651  416  359  161  –  –  6 134 

 

Restated March 20232, 3  Openserve 
Rm 		 Telkom 
Consumer 
Rm 		 BCX 
Rm 		 Gyro 
Rm 		 Other 
Rm 		 Eliminations 
Rm 		 IFRS 16 
reversal 
Rm 		 Consolidated 
Rm 
Revenue from external customers1, 3  4 089  25 567  12 154  724  –  –  –  42 534 
Revenue from contracts with customers recognised over time3  3 976   21 774   9 486   –   –   –   –   35 236 
  Voice –  5 864  2 528  –  –  –  –  8 392 
   Interconnection  281  505  –  –  –  –  –  786 
   Data  3 440  14 806  2 718  –  –  –  –  20 964 
   Information technology services3 –  –  3 593  –  –  –  –  3 593 
   Customer premises equipment related services  –  97  605  –  –  –  –  702 
   Interest revenue                                                  –  319  42  –  –  –  –  361 
   Sundry revenue                                             255  183  –  –  –  –  –  438 
Revenue from contracts with customers recognised at a point in time3  –   3 590   2 668   –   –   –   –   6 258 
   Customer premises equipment  –  3 529  739  –  –  –  –  4 268 
   Information technology hardware and software3  –  –  1 929  –  –  –  –  1 929 
   Sundry revenue   –  61  –  –  –  –  –  61 
Lease revenue 113  –  –  724  –  –  –  837 
Insurance revenue2  –  203  –  –  –  –  –  203 
Intersegmental operating revenue3  8 808  309  1 062  906  541  (10 781) (845) – 
Other income  231  821  69  13  838  (1 109) –  863 
Total expenses  (9 436) (23 402) (11 478) (512) (914) 11 890  –  (33 852)
   Cost of handsets, equipment, software and directories   –   (4 305)  (2 051)  –   –   15   –   (6 341)
   Sales commission, incentives and logistical costs  –  (2 522) –  –  –  –  –  (2 522)
   Payments to other operators  (709) (2 685) (409) –  –  404  –  (3 399)
   Insurance service expense2  –  (209) –  –  –  –  –  (209)
   Employee expenses  (3 240) (1 246) (3 394) (133) (214) –  –  (8 227)
   Other expenses3  (752) (962) (3 929) (28) (265) 3 611  –  (2 325)
   Wholesale voice and non-voice services  –  (6 174) (196) –  –  6 174  –  (196)
   Maintenance  (1 689) (2 453) (838) (25) (67) 918  –  (4 154)
   Marketing  (26) (677) (82) (1) (26) –  –  (812)
   Impairment of receivables, contract assets and loans  (30) (1 058) (90) (20) (57) –  –  (1 255)
   Service fees  (2 834) (987) (459) (298) (279) 777  –  (4 080)
   Lease-related expenses  (156) (124) (30) (7) (6) (9) –  (332)
EBITDA for reportable segments including intersegmental transactions   3 692   3 295   1 807   1 131   465   –   (845)  9 545 
Reconciliation of operating loss to loss before tax                         
Normalisations                         
Restructuring expenses                       (1 065)
EBITDA for reportable segments                       8 480 
Depreciation, amortisation, impairments and write-offs                       (20 653)
Operating loss                       (12 173)
Investment income                       155 
Net finance charges, hedging costs and fair value movements                       (1 484)
Loss before taxation                       (13 502)
Other segment information                         
Capital expenditure of property, plant and equipment and intangible assets  2 700  3 820  455  261  165  –  –  7 401 
1 Revenue includes transactions generated by subsidiaries of BCX in countries outside of South Africa. These are however not considered material to the Group and are thus not disclosed separately. Group revenue increased marginally, driven by an increase in mobile service revenue and IT software and licences sales. This was offset by a decrease in fixed, mobile and IT service revenue due to the challenging operating environment.
2 Restated for the adoption of IFRS 17. Refer to notes 2.2.1 and 2.7.
3 These line items represent the net amounts in the BCX segment. The prior year segment has been restated due to the IFRS 15 principal versus agent assessment. Refer to notes 2.3.1 and 2.7.

Entity-wide disclosures
All material non-current assets other than financial instruments, deferred tax assets, post-employment benefit assets, and rights arising under insurance contracts related to the segments above, are located in South Africa. Assets belonging to the subsidiaries of BCX outside of South Africa are not considered material to the Group as a whole.

No single customer contributes more than 10% of the revenue from external customers and thus no specific information relating to major customers is included in the segment information above.

For the purpose of assessing revenue contribution per customer, management does not treat government as a single customer.