The Audit Committee has formal terms of reference which are updated on an annual basis, or as and when required. The Board is satisfied that the Audit Committee has complied with these terms, and with its legal and regulatory responsibilities as set out in the Companies Act, 71 of 2008 (as amended) (Companies Act), King IV Report on Corporate Governance for South Africa, 2016 (King IV) and the JSE Listings Requirements (JSE LR).
The primary role of the Audit Committee is to ensure the integrity of Telkom SA SOC Ltd (Telkom or the Company) and the Telkom Group's financial reporting and audit processes and that a sound risk management and internal control system is maintained. In pursuing these objectives, the Audit Committee oversees relations with the external auditor and reviews the effectiveness of the internal audit function.
The Audit Committee consisted of five independent Non-executive Directors from 1 April 2024 to 31 March 2025. Keith Rayner is the Chairperson of the Audit Committee.
The Board believes that the Audit Committee collectively possesses the knowledge and experience to oversee Telkom's financial management, internal and external audit functions, the quality of Telkom's financial controls, the preparation and evaluation of Telkom's audited company and consolidated annual financial statements, and Telkom's periodic financial reporting.
The attendance of Audit Committee members at its meetings during the financial year was as follows:
| Member | Attendance |
| KA Rayner (Chairperson) | 6/6 |
| O Ighodaro1 | 3/3 |
| KP Lebina | 6/6 |
| PCS Luthuli | 6/6 |
| H Singh | 6/6 |
| LL von Zeuner2 | 3/3 |
| 1 | Appointed on 20 August 2024. |
| 2 | Resigned on 20 August 2024. |
The Telkom Group has established and maintains internal controls and procedures, which are reviewed regularly by Internal Audit, which then reports to the Risk and Audit Committees. These reporting responsibilities include managing the risk of business failures and providing reasonable assurance against such failures. However, this does not guarantee that such risks are eliminated.
It is the duty of the Audit Committee, inter alia, to monitor, review and, where applicable, approve:
Annual financial statements
The Committee has reviewed and is satisfied that the annual financial statements, including accounting policies, are appropriate and comply with the IFRS® Accounting Standards of the IASB and in compliance with the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, the Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, the JSE LR and the requirements of the Companies Act.
Management and the Audit Committee addressed key issues, including the following:
| IFRS 16 valuation |
The review and consideration of the IFRS 16 valuation because of the high number of leases. The major lease categories that gave rise to a right-of-use (ROU) asset and related liability primarily
relate to the masts and towers co-location lease agreements, property leases, and vehicle fleet leases.
As of 31 March 2025, the ROU asset and liability were reflected at R6 384 million (31 March 2024: R5 594 million) and R6 920 million (31 March 2024: R6 461 million), respectively, with related depreciation and interest of R1 655 million (31 March 2024: R1 463 million) and R529 million (31 March 2024: R586 million) for the 12-month period under review. |
| Dividend consideration |
Telkom's goal is to return cash to shareholders after sufficiently funding capex and strengthening the balance sheet. Management has considered the Group's business plans and is confident that
Telkom will be in a position to pay dividends in FY2026.
The dividend policy is based on available free cash flow while prioritising a strong balance sheet and future capex requirements. The following distributions were approved by the Board for FY2025:
|
| Actuarial assumptions | The review and approval of the actuarial assumptions for recommendation to the Board for both the interim period-end and financial year-end for financial computation and compilation purposes. |
| Impairment testing | The review of the impairment testing of Telkom Group's cash generating units (CGUs) resulted in no impairment for BCX, the Telkom Consumer CGU, and the Openserve CGU. |
| Expected credit loss provisions | The review of the impairment of trade and other receivables, finance lease receivables and contract assets, and intercompany receivables in accordance with IFRS 9. |
| Key audit matters | The review and consideration of the key audit matters are detailed in the external auditor's report on the annual financial statements. |
| Group Chief Executive Officer and Group Chief Financial Officer responsibility statement | The review and consideration of the Group Chief Executive Officer and Group Chief Financial Officer responsibility statement as required in terms of paragraph 3.84(k) of the JSE LR. |
| Remediation of internal control deficiencies | The review and consideration of timeously implemented remedial actions by management regarding internal control deficiencies identified by Internal Audit. |
| Compliance with King IV and JSE Listings Requirements | The review and consideration of the King IV disclosures, practices, and principles and the JSE corporate governance disclosures in accordance with the JSE LR and the JSE disclosure policy. |
The Audit Committee discharged all responsibilities and functions delegated to it in terms of the Audit Committee's terms of reference, the Companies Act, King IV, and the JSE LR.
During the year, the Audit Committee undertook the following:
In respect of the auditors:
In respect of financial reporting
In respect of the internal audit function:
In respect of the Audit Committee:
In respect of information technology governance:
The Audit Committee has the primary responsibility for overseeing the relationship with, and performance of, the external auditor. This includes making recommendations on the appointment, reappointment, and removal of the external auditor, assessing their independence on an ongoing basis, and reviewing and approving the audit fee.
After taking account of the audit approach, materiality, and audit risks, the Audit Committee reviewed and agreed both the interim period review plan and financial year-end audit plan, and agreed to both the interim and financial year-end audit fees. The Audit Committee received updates during the year on the audit process, including how the external auditor had challenged the Telkom Group's assumptions on the significant matters noted in this report.
The Board delegated the responsibility of reviewing the Company's current appointed auditor for reappointment to the Audit Committee. The Audit Committee makes a recommendation to the Board, which then makes a recommendation to the shareholders in the notice of annual general meeting (AGM). The Audit Committee recommended the reappointment of the firm and individual partner to the Board, which recommended the same to the shareholders in the AGM notice.
The Audit Committee is also responsible for determining that the external auditor has the necessary independence. A key factor that may impair any such independence is a lack of control over non-audit services provided by the external auditor.
Telkom addresses this issue by ensuring prior approval by the GCFO and Chairperson of the Audit Committee of all non-audit services. Fees paid for non-audit services to the external auditor amounted to R2 965 493 for the financial year ended 31 March 2025 (31 March 2024: R681 000). Fees accrued for audit work performed for the financial year ended 31 March 2025 by the external auditor amounted to R86.84 million (31 March 2024: R81.75 million). Non-audit fees as a percentage of audit fees for the year ended 31 March 2025 is approximately 3% (31 March 2024: 1%). The increase in the non-audit fee is largely due to the Swiftnet transaction.
The Audit Committee Chairperson met with the external auditor prior to each Audit Committee meeting to discuss and review the content of the external auditor's report to the Audit Committee.
The Audit Committee has reviewed and assessed the independence of the external auditor, and confirmed that the criteria for independence, as set out in the rules of the Independent Regulatory Board of Auditors (IRBA), International Code of Ethics for Professional Accountants and other relevant legislation, have been followed. The Audit Committee is satisfied that the external auditor is independent of the Telkom Group.
The internal audit function adopts a co-source operating model to supplement its activities and execute its mandate. The co-source partners are KPMG Services (Pty) Ltd (KPMG), Protiviti Inc. and Ernst & Young Inc. (EY). The co-sourced service providers form part of Telkom's internal audit function and report directly to the CAE.
Internal Audit monitors the internal control systems of the Company and Group and reports its findings and recommendations to the Audit Committee and senior management. The Audit Committee determines the purpose, authority, and responsibility of the internal audit function in the Internal Audit charter.
The internal audit function is headed by the CAE, who may be appointed or dismissed by the Audit Committee. The Audit Committee is satisfied that the incumbent CAE has the requisite skills and experience and that he is supported by a sufficient staff complement with appropriate skills and training.
Telkom's Internal Audit operates in accordance with the International Standards for the Professional Practice of Internal Auditing as prescribed by the Institute of Internal Auditors. During the year, Internal Audit's activities were identified and planned using a combination of Telkom'a risk management framework and the risk-based methodologies adopted by Internal Audit. The Audit Committee approves the annual Internal Audit assurance plan presented by Internal Audit and monitors progress against this plan.
Internal Audit reports deficiencies to the Audit Committee quarterly together with recommended remedial actions, which are then followed up. During the year, Internal Audit provided the Audit Committee with a written report, which assessed the internal controls over financial reporting, IT governance, and the risk management process as adequate.
The Chairperson of the Audit Committee met with the CAE prior to each Audit Committee meeting to discuss and review the Internal Audit report to the Audit Committee.
Internal Audit and the external auditors have unrestricted access to the Audit Committee, the Audit Committee Chairperson, the Risk Committee Chairperson, and the Chairperson of the Board, thereby ensuring the maintenance of independence.
Telkom Group's Risk Committee reviews the Group's risk management, enterprise risk management programmes, business continuity, and forensic services. The Audit Committee Chairperson is a member of the Risk Committee and ensures any identified financial risks are referred to the Audit Committee for consideration. The top principal risks, being those that will prevent the Group from achieving its strategic objectives in the short and medium term, are reported to and considered by the Risk Committee and the Board. All principal risks are currently managed within the risk appetite statements. The key focus areas, risk appetite, and further details of the Group's principal risks are reported in the risk management report included in Telkom Group's integrated report.
The Internal Audit department conducted a review of the effectiveness of the risk management function, in accordance with the approved risk management framework. The results of the review indicated that the risk management process was satisfactory as at 31 March 2025.
Telkom Group assessed risks based on principal risks as indicated above. The current combined assurance model is representative of how risks are being managed across the five lines of assurance. Management and Internal Audit have implemented a coordinated structure for planning, executing, and reporting on Internal Audit, compliance, and risk activities. The Audit Committee is satisfied that the Group has optimised assurance across the five lines of assurance in accordance with the approved combined assurance model. Furthermore, the model is considered effective in achieving its objectives of coordinating assurance and reporting to provide management and the Board with a clear view of the Group's risks, what the effective risk mitigations are, and the resulting acceptable level of residual risks.
Based on information received from and discussions held with management and the external auditor, the Audit Committee is of the opinion that the financial records can be relied upon as the basis for the preparation of the annual financial statements.
The Audit Committee has considered and discussed the annual financial statements with both management and the external auditor. During this process, the Audit Committee:
A key requirement of our annual financial statements is for these to be fairly presented, balanced, understandable and provide the information necessary for stakeholders to assess the Group's position, performance, business model, and strategy. The Audit Committee and the Board are satisfied that the annual financial statements meet this requirement.
The Audit Committee believes that the annual financial statements comply in all material respects with the statutory requirements of the various laws and regulations governing the disclosure and reporting of the annual financial statements. Furthermore, the annual financial statements comply, in all material respects, with IFRS, as issued by the IASB, the SAICA Financial Reporting Guides issued by the Accounting Practices Committee and Financial Reporting Pronouncements issued by the Financial Reporting Standards Council, as well as the requirements of the Companies Act and the JSE LR. The Audit Committee has recommended that the Board adopt and approve the annual financial statements.
Keith Rayner CA(SA)
Chairperson: Audit Committee
9 June 2025